Nikkei Tumbles As AI Rally Reverses

South Korean stocks face foreign outflows and declining trading activity as AI investment enthusiasm wanes. The Kospi index has dropped 22% since late 2026, with Samsung and SK Hynix underperforming. Foreign investors withdrew $131 billion this year, the largest outflow in Asia. Retail participation and margin loans have also decreased. Taiwan's Taiex has outperformed, gaining 70% year-to-date, attracting investors seeking AI exposure.

The U.S. Department of Energy will release 4 million barrels of crude oil from the Strategic Petroleum Reserve to ExxonMobil and BP America to address supply disruptions caused by Hurricane Isaias. The companies will return the borrowed oil plus additional barrels in 2021. The released oil could produce about 80 million gallons of gasoline, according to DOE figures.

France will release 10 million barrels of diesel from its emergency reserves to combat rising fuel prices, according to Prime Minister Sebastien Lecornu. The move is part of a G7 coordinated effort and could reduce pump prices by €0.12 to €0.18 per liter. France has previously committed to releasing 14.6 million barrels of oil and has already released 3 million barrels of diesel, with around 61 million barrels remaining in reserve, per JP Morgan.

U.S. consumer prices for September are expected to rise 0.6%, driven by a 10% jump in gasoline prices, while core inflation is projected to increase 0.2%. Apple Inc. raised iPhone prices, potentially pushing up the CPI for education and communication goods by 1.2%. The Federal Reserve may consider this data at its October 28 meeting. Apple's stock is trading at $332.34, 15.4% above its GF Value™ of $288.10, indicating modest overvaluation.

U.S. jobless claims fell to 197,000, indicating low layoffs and a stable job market. PepsiCo plans price hikes on snacks and drinks to offset rising costs, lowering its earnings growth forecast to 2.5-3.5% and maintaining revenue growth at 6%.

The U.S. Treasury sold $39 billion of 10-year notes on October 7, 2026, with foreign buyers taking 80.34% and primary dealers only 2.54%, a record low. The notes cleared at 5.300%, below market expectations. The iShares 20+ Year Treasury Bond ETF (TLT) and iShares 7-10 Year Treasury Bond ETF (IEF) saw slight declines. The benchmark yield touched 5.36%, its highest since 2002, before closing at 5.28%.