Global AI stock selloff slows after Asia rout

A global selloff in AI-related equities accelerated sharply in Asia on Thursday amid fears about circular financing in the sector, but the rout lost momentum during European and US trading hours. Safe-haven demand still drove a significant rally in US Treasuries despite hotter-than-expected producer inflation data. South Korea's KOSPI fell 7.5 percent to a six-month low, and Japan's Nikkei dropped 5 percent. CoreWeave bonds issued four months ago fell below distressed levels, while the cost of insuring against default by major US AI firms hit record highs. US stocks rebounded, with the Dow rising 1 percent. The selloff highlights growing concerns that AI capital expenditure is increasingly financed by debt and private credit. While not yet at crisis point, analysts warn of a potential self-fulfilling doom loop, as selling in weaker credits could force downgrades and further selling across the sector.