Yesterday, US equity indices finished mixed. The S&P 500 rose by 0.02%, while the Nasdaq 100 fell by 0.18%. The Dow Jones Industrial Average gained 0.51%.

After the closing bell, however, futures saw a sizable sell-off that carried into today. The MSCI Asia Pacific index plunged by as much as 3.6% to a May low, approaching technical correction territory. South Korea's KOSPI led regional losses, tumbling by 11% and trading more than 30% below its peak amid a deepening semiconductor rout. SK Hynix and Samsung Electronics each fell by 13%.

Brent continued Monday's drop — the largest in more than three months — sliding by another 0.6% to roughly $87.80/bl. Treasuries rallied for a second day, pushing the 10-year yield down two basis points to 4.63%.

Clearly, greed has turned to fear in AI-linked chip names. Investors are now interpreting every headline negatively and using it as an excuse to sell rather than critically assessing true fundamental impacts. The chip sell-off reflects a confluence of worrying signals. A fresh round of Nvidia deals totaling more than $750bn stoked fears of artificially inflated AI demand via circular transactions. A report by The Information that a state-linked Chinese firm has started mass production of immersive deep-UV lithography tools added to the unease. Investors are not yet ready to dismiss AI-sector concerns: the latest semiconductor liquidation shows that doubts over spending, returns, and valuation are deepening, not abating.

The chip crash has significantly raised the stakes ahead of a busy event week. Key bank decisions from the Fed, the Bank of Japan, and the Bank of England are due, and megacap earnings loom: Microsoft, Meta, Apple, and Amazon are set to report this week. Geopolitics and oil are likely to remain the biggest wildcards.

Technically, the S&P 500 analysis suggests that the immediate task for buyers is to overcome the resistance level of $7,404. Doing so would confirm upside and open the path to $7,427. Holding above $7,451 would further cement the bulls' position. On the downside, buyers must defend $7,381. A break below that level would likely push the index back to $7,355 and open the way to $7,339.