Global Chip Stock Sell-Off Hits Asia Hard as Nasdaq Short Positions Reach Record High
Global markets continue to decline following a sharp sell-off in semiconductor stocks and rising US bond yields. Asian markets experienced steep losses, led by South Korea where the Kospi index dropped nearly 6%, with major chipmakers Samsung and SK Hynix falling over 7% each. Japan, China, Hong Kong, and Australia also traded lower. Meanwhile, oil prices rose for the fourth consecutive day amid tensions with Iran, and gold stabilized near $1,340 per ounce after its largest daily drop in almost a month, pressured by higher bond yields reducing its appeal.
In the US, the Trump administration agreed to delay a planned 50% tariff on Canada by three days to allow ongoing negotiations. Futures on Wall Street remained steady ahead of the Federal Reserve meeting minutes, which are expected to shed light on internal debates and future interest rate directions. On Wall Street, the Nasdaq fell 1.1%, dragged down by semiconductor stocks, while the S&P 500 declined 0.6% and the Dow Jones was nearly flat. Semiconductor ETFs tracking memory chips dropped over 5%, losing momentum after August gains. US 10-year Treasury yields stayed near their highest levels since early 2025, fueling investor concerns about inflation, rising government debt, and geopolitical risks that could disrupt supply chains.
In Tel Aviv, the sell-off in US chip stocks impacted dual-listed shares, with Camtek down about 3% and Tower Semiconductor down 2%, partially offset by a 2.5% gain in Elbit Systems. The Tel Aviv 90 index rose 1.5%, led by a 4.3% surge in the software sector following strong earnings from Matrix, while technology, security, and industrial sectors declined. Several Israeli companies, including Clal Insurance, Castro, Ashtrom, Beit Shemesh Engines, and Azrieli Group, are scheduled to report quarterly results.
Notably, institutional investors and hedge funds have established the largest-ever short position against Nasdaq 100 futures, estimated between $16 billion and $20 billion. This bearish stance reflects concerns about overvaluation in tech giants, especially chipmakers and AI firms. However, insider buying by company executives is at a 15-year high, signaling strong confidence in their companies’ prospects. Intel CEO Lip-Bu Tan, for example, purchased over 105,000 shares worth around $10 million in August. Analysts warn that this combination of heavy shorting and aggressive insider buying could trigger a short squeeze, potentially driving the market sharply higher if shorts are forced to cover their positions.
