Hot US inflation and a distressed CoreWeave bond send the KOSPI down more than 8%

A tenth of a point is a small miss for a fall of that size. Ponmudi R, CEO of Enrich Money, put the market's expectation for September CPI at 3.6% and the August reading at 3.4% ^[4]. The print therefore beat expectations by 0.1 point ^[23] and rose 0.3 point on the month ^[24]. Bloomberg, as carried by Gulf News, named a second trigger: CoreWeave shares tumbled in the US after its bonds dropped to levels that typically signal distress ^[16]. The KOSPI was also heading for a seventh consecutive decline and its lowest close since early April ^[14], so the slide began before the CPI release.

The size of the move depends on the hour of the report. The Hindu BusinessLine had the KOSPI down over 7% and the Nikkei down 4% ^[26]. Business Today had the KOSPI down 7.6% and the Nikkei down 4.53%, at 64,659.88 ^[28]. Gulf News had the Nikkei down more than 5% ^[29]. Ponmudi R cited a KOSPI fall of more than 6% and a Nikkei fall of over 3% in early trade ^[27]. Only the Korea Times attaches a clock time, 12:38 p.m., to its figure of more than 8% ^[5].

In our view, tighter financing is already in evidence for AI-linked issuers. CoreWeave's notes due 2032 now trade near 78 cents on the dollar ^[17], 22 cents under face value ^[25]. SoftBank Group paid record yields late last month to fund its AI plans ^[21]. Hebe Chen, an analyst at Vantage Global Prime, told Bloomberg that CoreWeave's funding strain and hotter US inflation have raised fears over borrowing costs ^[18]. US Treasury yields jumped sharply for a brief while after the release ^[11]. The 10-year then edged down to around 5.19%, still near multi-decade highs, according to Hariselvan Radhakrishnan of HST Wealth ^[1]. He said: "The move does not materially ease concerns over persistent inflation or the prospect of restrictive monetary policy lasting longer." ^[2]

For other rate-sensitive budgets, the evidence is a high benchmark and an unknown direction. Ponmudi R said the print reinforced concerns that US rates could remain elevated for longer ^[6]. Gulf News, relaying Bloomberg, said it strengthened bets on more aggressive Federal Reserve tightening ^[8], and Business Today cited fears of rate hikes ^[10]. Staying high and rising further are different cases for a floating-rate line. None of the sources says what the Fed will do. Radhakrishnan said Thursday's US producer-price and retail-sales reports would be key to whether yields extend their retreat or resume their climb ^[3].

Earnings forecasts and guidance are strong. Viram Shah, CEO of Vested, said analysts expect S&P 500 earnings to grow 29.6% year on year on 12.3% higher revenue, with 62% of companies issuing positive guidance against a five-year average of 40% ^[13]. The KOSPI trades below five times forward earnings, less than half the level of a year ago ^[22].