Key Highlights

● China's CSI 300 closed at 4,036.30, more than a fifth below its June 22 peak.

● South Korea's Kospi was the hardest hit among major Asian benchmarks.

● Investors piled into US Treasuries, pushing the 10-year yield below a closely watched threshold.

● Brent crude climbed to $113.17, its highest since May 4.

China's CSI 300 index slid into a bear market on Thursday, October 22, as a wave of selling in technology stocks swept across Asia before Wall Street opened.

The index, which tracks the 300 largest stocks listed in Shanghai and Shenzhen, closed at 4,036.30, leaving it more than a fifth below its June 22 peak. A decline of that size from a recent high is widely used as the definition of a bear market.

A global AI selloff

The drop came as Asian markets tumbled across the board. South Korea's Kospi was the hardest hit among the major benchmarks, followed by Hong Kong's Hang Seng and Japan's Nikkei, with reports differing on the size of Tokyo's loss.

The selling followed overnight news from the United States. Meta Platforms (NASDAQ:META) reported on Wednesday that it expects 2026 capital spending of $135 billion to $145 billion and posted negative free cash flow, its first cash outflow in more than a decade. Lam Research (NASDAQ:LRCX), a key supplier of chipmaking equipment, issued guidance with a midpoint slightly below consensus and warned of supply constraints.

The two reports raised fresh doubts about the economics of the artificial-intelligence boom and how it will be financed. Asian markets, which include many chipmakers and technology suppliers, were among the first to react.

Lam's China warning

Lam Research's outlook carried a specific message for China. The company said China accounted for a large share of its September-quarter sales and guided that business "meaningfully down" for the coming quarter.

Nvidia (NASDAQ:NVDA) CEO Jensen Huang, speaking on the sidelines of Nvidia's GTC event in Berlin, also discussed China. "No market is closed forever," he said.

The June 22 milestone

The timing of the CSI 300's peak is notable. June 22 is also the date of the record close for the Philadelphia Semiconductor Index in the US. Both markets have since retreated, though the US chip index remains well up for the year.

The US index suffered its biggest one-day drop since June 23 on Thursday, as Nvidia, Lam Research, KLA (NASDAQ:KLAC), Applied Materials (NASDAQ:AMAT) and Advanced Micro Devices (NASDAQ:AMD) all fell sharply.

Wall Street follows

When US trading began, the selling continued. The Nasdaq Composite sank 694 points to 26,008.86, its steepest drop since June 5, while the S&P 500 fell 93.74 points to 7,663.43, its worst day since July. The Dow Jones Industrial Average was essentially flat.

European stocks posted their biggest drop in three weeks, with France's CAC 40 sliding.

The global mood was also weighed down by geopolitics. Brent crude climbed to $113.17, its highest since May 4, after Houthi attacks hit Saudi Arabia's Dammam airport and an Aramco oil field. A media report said the US and Israeli militaries have plans to renew strikes on Iran after the November 3 US midterm elections.

Traditional havens did not hold up either. Gold fell to its lowest in more than two months, and bitcoin dropped to about $81,200 to $81,300. Investors instead piled into US Treasuries, pushing the 10-year yield back below a closely watched threshold.

China's Chip Outlook After Lam's Warning

Chinese markets will look for signs that the AI selloff is stabilizing. Lam Research's guidance for weaker China sales will keep attention on the outlook for chip spending in the country.

US stock futures were roughly flat on Thursday evening, offering Asian traders a calmer lead on Friday. Next week's earnings from Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN) and Intel (NASDAQ:INTC) will help determine whether the global tech retreat deepens.