Market report: Sell-off in technology stocks weighs on stock markets

The DAX started trading with losses. At the start, the leading German index lost 0.5 percent to 25,173 points. The weak specifications from Asia had a negative impact. The wave of sales in semiconductor stocks that had already started the day before on the US technology exchange Nasdaq continued there.

The stock exchanges in South Korea fell particularly sharply, where the leading Kospi index fell by around nine percent. The Japanese Nikkei index, which is also technology-heavy, fell by almost five percent. The Shanghai Stock Exchange and the index of the most important companies in Shanghai and Shenzhen each lost a good two percent.

Investors are increasingly questioning whether the high valuations of many technology companies are still justified given the economic and monetary risks. "They are increasingly wondering what price they should pay for this growth when interest rates are high and may continue to rise," said Charu Chanana, investment strategist at Saxo Bank.

The losses are triggered, among other things, by surprisingly high inflation data from the USA. They are fueling concerns that the US Federal Reserve could raise interest rates further.

At their meeting on October 27th and 28th, the monetary authorities will discuss the future interest rate course in the USA. The key interest rate is currently 3.75 to 4.00 percent. Many experts believe a further increase is possible this year, probably in December.

Higher interest rates make loans and investments more expensive and at the same time make fixed-interest investments more attractive than stocks. Technology stocks are particularly sensitive to this, as their valuations are often based on high profit expectations for the future.

There are also fears that competition for memory chips could intensify. After the strong price gains of the past few months, investors are apparently taking profits and reacting sensitively to possible changes in demand. The latest price losses show how vulnerable technology stocks are to disappointments and new uncertainties despite the ongoing boom in artificial intelligence.

After the Dutch semiconductor company ASML, the Taiwanese chip contract manufacturer TSMC also presented its quarterly figures today. The company achieved another profit record in the third quarter. The momentum in orders for AI data centers caused profits to rise by over two thirds year-on-year to a good 763 billion Taiwan dollars (21.2 billion euros), as the company announced. Analysts on average had expected less.

TSMC is benefiting significantly from the boom in artificial intelligence and the high demand for high-performance semiconductors. The group produces chips for numerous large technology companies and thus plays a central role in the global semiconductor industry supply chain.

However, the figures reflect a tense market environment. While the demand for AI chips continues to be a growth driver, the high expectations placed on the industry are creating increasing pressure to justify themselves. Investors therefore pay attention not only to sales and profits, but above all to the outlook.

In addition to the international stock market issues, the price development in Germany is also coming into focus. Potatoes in particular have become significantly more expensive. Because of the low harvest, consumers had to pay 11.3 percent more for the staple food in September than a year earlier, as the Federal Statistical Office announced. The price increase was therefore well above the general inflation rate of 3.3 percent.

The smaller harvest reduces supply and drives up prices. Retailers can pass on rising purchase prices to their customers. How much the higher costs are actually reflected in the store prices also depends on the margins in retail and the further development of the offering.

Potato prices make it clear that inflation does not affect all areas equally. While general inflation may be more moderate, consumers still have to expect significant price increases for individual foods. When assessing purchasing power, not only overall inflation remains crucial, but also the development of prices for everyday goods.