Trading Day: Sizzling AI now fizzling

By Jamie McGeever

ORLANDO, Florida, June 10 (Reuters) - Another heavy selloff in tech dragged U.S. and global stocks lower on Wednesday, and wider investor sentiment was rocked and oil prices rose sharply after U.S. President Donald Trump threatened to hit Iran "very hard".

In my column today, I look at how global trade seems to be thriving, despite tariffs, trade wars, real wars and an energy shock. There's a catch though - the headline numbers are being inflated by rising prices more than volumes. How sustainable is this?

If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today.

1. U.S. consumer inflation breaks above 4% as Iran war raises energy prices

2. Why the blockbuster SpaceX IPO may spell more bad news for crypto

3. World markets walk a tightrope between AI stocks and oil shocks

4. Stock-pay boom amplifies U.S. economic drumbeat: Mike Dolan

5. Bank of Japan Governor Ueda hospitalized, will miss June meeting

Today's Key Market Moves

• STOCKS: South Korea -5%, China and Japan -2%. Big three U.S. indices down close to 2%.

• SECTORS/SHARES: Eight S&P 500 sectors fall, three rise. Tech -2.3%, industrials -3.4%; consumer staples +1.7%. Super Micro Computer -28%, Nvidia -3.8%. "SOX" chip index -3.6%.

• FX: USD/JPY up to 160.50, highest since April 30 when Japan last intervened.

• BONDS: U.S. yields up slightly. 10-year auction draws very strong demand, especially from indirect bidders, a proxy for foreign central banks.

• COMMODITIES/METALS: Oil rebounds 2%, gold -4%.

Today's Talking Points

* Tech it down a notch

The AI frenzy is losing its luster, ironically just as the world's biggest IPO is about to land. Or perhaps they're not totally unconnected. Either way, AI and tech stocks are under pressure and are dragging the broader indices down with them.

The "SOX" chip index has lost 13% in the last week, and the Nasdaq has fallen five days out of the last six, its worst run this year. The Nasdaq is also at its lowest daily close in over a month, as is the S&P 500 tech index. SpaceX, come on down!

* Core relief?

Annual U.S. CPI inflation is now above 4%, more than double the Fed's 2% target. It is expected to keep rising in the coming months, tightening the squeeze on consumers and households - and voters - as the November midterm elections come into view.

Was there anything positive in the numbers? Monthly core inflation slowed to 0.2% from 0.4%, below consensus 0.3%. Core goods inflation turned negative for the first time this year, suggesting the tariff impulse is fading, and the oil spillover into core remains limited. Grounds for optimism, or straw-clutching wishful thinking?

* BOJ Governor

Bank of Japan Governor Kazuo Ueda was hospitalized on Wednesday, and will miss the bank's policy meeting next week. It is the first time a BOJ governor will miss a scheduled policy meeting since the central bank began deciding policy ​under the current arrangement in 1998.

The BOJ is expected to raise rates 25 bps to a three-decade-high of 1.00%. From an FX perspective, a strong commitment to more tightening might be needed to prevent the weak yen from hitting multi-decade lows. But Ueda's absence makes that communication difficult.

What could move markets tomorrow?

• Developments in the Middle East

• Turkey interest rate decision

• European Central Bank interest rate decision

• U.S. weekly jobless claims

• U.S. PPI inflation (May)

• U.S. Treasury sells $22 billion of 30-year bonds at auction

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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

(Reporting by Jamie McGeever; Editing by Nia Williams)