Chip Stocks Crash as Oil Surge Rattles Wall Street; $1.5 Trillion Options Expiry Looms

A selloff in semiconductor stocks dragged down markets Tuesday, as investors questioned whether massive spending on artificial intelligence can justify the sector’s high valuations [191375]. The decline came alongside a spike in oil prices, which pushed bond yields higher and added to market jitters [191375]. The S&P 500 closed 0.2% lower on the day, with bank stocks rallying while chip shares pulled back [186651].

Adding to the uncertainty, traders are preparing for a massive event Wednesday as a record $1.5 trillion in currency options contracts are set to expire [191350]. The expiry covers major pairs like the euro against the dollar and the dollar against the yen, and could force banks, hedge funds, and corporations to quickly close or adjust their positions, leading to sudden price swings in foreign exchange markets [191350].

Meanwhile, Hong Kong’s stock market faces potential selling pressure as six-month lock-up periods expire for shares of popular artificial intelligence and semiconductor companies, including Zhipu AI and MiniMax [190740]. Analysts warn the fresh supply of shares could drain liquidity, especially as many of the same companies also plan large secondary share placements [190740].

In Europe, Germany’s two-year government bond yield briefly fell to its lowest point since mid-April, dropping to 2.58% before recovering to 2.60%, reflecting shifting expectations about the European Central Bank’s next interest rate decision [188024]. Copper prices edged higher on Tuesday, moving with small shifts in the US dollar as traders watched for signals on future US interest rates [188038].

Elsewhere, soybean and corn futures rose sharply in Chicago as traders focused on potential weather threats to crop development in the United States and Europe [190168]. Turkey’s main stock index, the BIST 100, fell roughly 40 points at the start of trading Wednesday [191605].