Emerging-market stocks staged a significant recovery, with MSCI's benchmark for developing-nation equities climbing as much as 3.5%, marking its biggest increase since April 8. According to reports from Business Standard, the rebound was led by South Korea, as investors snapped up artificial intelligence shares at lower prices following Monday's selloff. South Korea's SK Hynix and Samsung Electronics contributed about half of the gauge's gains, demonstrating the key role of technology stocks in driving the EM recovery. The latest data shows the iShares MSCI South Korea ETF has tumbled more than 11%, putting it on pace for its steepest one-day decline since March 2020, as reported by Yahoo Finance.
The semiconductor sector experienced its steepest decline since April 2025, with chip stocks hammered on June 5, 2026, as reported by Yahoo Finance. The slump has erased more than $1 trillion in market value as investors rapidly unwind positions tied to the AI boom. The weakness is spreading beyond U.S. markets, with the iShares MSCI South Korea ETF serving as a real-time gauge of stress across the memory chip and AI supply-chain ecosystem, given that Samsung Electronics and SK Hynix make up a significant portion of the fund. The Philadelphia Semiconductor Index slumped more than 10% to post its worst day of 2026, sparked by a blowout U.S. jobs report that led to traders raising expectations for Federal Reserve interest rate hikes. As noted by Investing.com, Jim Bianco from Bianco Research highlighted that since the Iran war began at the end of February, the benchmark S&P 500 index is up more than 7%, but the same gauge without AI stocks is effectively unchanged, demonstrating how concentrated the rally has been in AI-related stocks.
Global markets showed mixed performance with MSCI's global stock index rising 0.29% to 1,104.19, while the S&P 500 dropped 0.22% to 7,389.09 and the Nasdaq fell 0.69% to 25,750.59. According to Reuters, the Jones Industrial Average rose 0.29% to 50,931.63, while the pan-European STOXX 600 rose 0.18% after paring earlier gains. The dollar index fell 0.22%, with the euro rising 0.23% to $1.1561, benefiting from geopolitical developments. Oil prices were last lower, though they had pared some of their decline after Trump's post about the U.S. responding to the helicopter shooting. Brent crude futures were down 3.1% to $91.38 a barrel, while U.S. West Texas Intermediate crude futures dipped 3.5% to $88.10 a barrel. US President Donald Trump claimed to be on the verge of a deal to end the war in the Middle East, which provided additional support to emerging market assets.
Emerging markets are experiencing heightened volatility as investors grapple with concerns about the AI sector rally. As reported by Business Standard, concerns are growing that the rally in AI has gone too far, creating uncertainty in markets. The latest developments show that strong semiconductor demand and long-term trends keep investors watching despite the current selloff, according to Zacks Equity Research. OpenAI, the maker of ChatGPT, filed a confidential U.S. IPO on Monday, just days before SpaceX made its highly anticipated market debut this week. As noted by Investing.com, OpenAI's filing comes just over a week after Claude-developer and rival Anthropic did the same, with Russ Mould from AJ Bell noting that "Having been beaten to the stock market starting line by Claude-owner Anthropic, the company which lit the touch paper on the whole AI theme with the launch of ChatGPT has filed for its own listing." The current recovery represents investors' willingness to buy AI dip after Monday's significant selloff, with upcoming share offerings by large US technology firms could drain capital from secondary markets, adding to the volatility facing EM stocks.
