[October 19, 2026 Morning Edition] Tech stocks plummet on AI infrastructure debt concerns. A turbulent start to the week as Chinese GDP and Middle East tensions intersect
Good morning, readers. A new week has begun.
Signs of re-accelerating inflation and doubts regarding AI investment are emerging as major themes in the market.
Following last week’s major turmoil, the Tokyo market today is also expected to see very nervous trading.
First, let’s unravel today’s market outlook by looking at the trends in overseas markets over the weekend and the depths of the macro environment.
■ Summary of overseas markets and the depths of the macro environment
The US market at the end of last week saw a clear risk-off rotation.
Concerns about debt sustainability associated with massive infrastructure investment are intensifying regarding AI-related stocks that have driven the market until now.
As a symbolic event, the corporate bond yield of CoreWeave, which develops AI-focused cloud services, soared to a distressed level of about 15 percent, and the company’s stock price also plummeted by about 25 percent for the week.
Emerging AI infrastructure companies, known as neo-clouds, are making large upfront investments to secure vast computing resources.
However, with the US 10-year Treasury yield remaining high at around 5.10 percent, the surge in funding costs is beginning to shake their business models to the core. This shock has cascaded across semiconductors and data center-related sectors, causing the tech-heavy Nasdaq Composite Index to plunge to around 26,140, down about 2.1 percent.
On a weekly basis, it is down 4.5 percent, marking its worst performance since June of this year.
Meanwhile, the S&P 500 index showed relatively firm movement at 7,659.44, down 1.09 percent, and the Dow Jones Industrial Average at 52,002, down 0.34 percent.
■ Commodities and Currencies: Resurging Geopolitical Risks
While the stock market is shaken by the decline in tech stocks, geopolitical risks in the Middle East are a powerful upward factor in the commodity market.
Against the backdrop of the ongoing conflict between the US and Iran, attacks on tankers around the Strait of Hormuz are increasing, and concerns about crude oil supply are resurfacing.
As a result, Brent crude oil futures closed at a high near $109.86 per barrel, an increase of about 5 percent for the week.
WTI crude oil futures are also showing movement approaching the $100 mark.
Gold, considered a safe asset, has been trading in a range of $4,166 to $4,188 per troy ounce, and while there is no sense of overheating, it maintains firmness in the high price range.
In the foreign exchange market, the dollar-yen is relatively stable at around 158.00 yen to the dollar, as the US high interest rates are offset by risk-averse yen buying.
What should be noted are resource-linked currencies such as the Australian dollar.
While they are showing relatively firm trends for the time being, benefiting from high crude oil prices, they carry the risk of a sudden change in sentiment depending on China’s economic indicators, which will be discussed later.
■ Current Status of the Japanese Stock Market and Technical Analysis
Turning to the Japanese market, the Nikkei Stock Average ended last week on the 16th with a rebound of 1.39 percent from the previous day to 65,324.29 yen.
However, this is largely a reaction to the major turmoil on the 15th, when it plunged to 64,092.74 yen, and on a weekly basis, it is a severe result of about minus 5.4 percent.
The distortion in supply and demand for AI and semiconductor-related stocks in the US is having a direct ripple effect on Japanese stocks, and there were phases where downward pressure remained in Nikkei futures during night trading.
From a technical perspective, the low of 64,093 yen on the 15th is seen as an important recent support line, but easy jumping into trades aiming for an autonomous rebound is strictly prohibited.
Even when considering buying, a cautious stance is required, waiting for the price to break through the 64,200 to 64,500 yen level and confirming a bottoming out thereafter.
■ Today’s Main Focus and Stocks to Watch
What will greatly influence the direction of the Asian market today, and the opening of Japanese stocks, are China’s third-quarter GDP, as well as important economic indicators such as industrial production and retail sales for September, which will be announced in the morning Japan time. The market consensus for GDP is a 4.4 percent increase year-on-year and a 4.3 percent increase quarter-on-quarter.
If these data are weak and fall below market expectations, it could become a minefield where risk-off movements accelerate across Asia as Oceania currencies are sold due to concerns about declining resource demand.
Conversely, if the results are strong, a temporary rebound can be expected, but since earnings announcements for major US IT companies such as Meta Platforms and Tesla are also scheduled for this week, it would be safer to keep positions light overall.
A stock that you should definitely include in your charts and monitor in today’s market is the semiconductor testing equipment giant, Advantest.
It has extremely high sensitivity to the sharp decline in semiconductor stocks in the US market last night and today’s Chinese economic indicators, and it can be said to be one of the stocks where supply and demand are most easily distorted.
Since the market’s doubts about the sustainability of AI investment directly affect the stock price, please pay close attention to the trend of trading volume immediately after the opening and the correlation with the Nikkei Average in the 64,000 yen range.
Even if it shows a rebound, there is a possibility that it will remain a temporary autonomous rebound, and if it breaks through the important support line, there is a high risk that selling will accelerate.
Fundamentals have entered a phase of strictly questioning the ‘balance between the quality of AI growth and debt costs’.
With the prerequisites for a bull market changing, today is likely to be a day dedicated to correcting overheating and confirming support lines.
In a market environment that feels as realistic as walking through a minefield, please try to trade with risk management as your top priority.
Now, let’s face the market calmly today as well.
※ This post is intended for information provision and chart analysis commentary, and does not solicit or instruct any specific investment behavior. Please make final investment decisions at your own discretion and responsibility.