SoftBank Group plunged 8.3% in Tokyo on Wednesday and South Korea's SK Hynix dropped 7.5% as Tuesday's Wall Street tech sell-off bled into Asia overnight, leaving traders to brace for a U.S. inflation print at 8:30 a.m. that will test whether the artificial-intelligence rally still has a floor.

Samsung Electronics fell 6.1% in Seoul, LG Display slid 7.6%, and Japan's Advantest closed 4.2% lower. Taiwan Semiconductor Manufacturing Co. dropped about 2%, Europe's Stoxx 600 Technology index led regional losses with a 1.6% decline, and London-listed Raspberry Pi fell more than 12%. Nvidia traded 2.1% lower in U.S. pre-market hours and the iShares Semiconductor ETF was off 2.7%. Tuesday's Nasdaq Composite slipped 0.97% and the S&P 500 lost 0.26%.

Margin snag

SoftBank's drop deepened after Bloomberg News reported that the Japanese investment giant's effort to secure at least $6 billion through a margin loan backed by its OpenAI stake had hit a snag. The company is exploring alternative funding options, the report said. The setback lands as SpaceX prepares to begin trading Friday at a $1.75 trillion valuation and OpenAI's confidential S-1 filing this week extends a queue of AI listings that strategists say is already pulling cash from incumbent tech names.

Siri disappoints

Apple shares fell more than 3% Tuesday, the worst day since February, after the company's Worldwide Developers Conference unveiled a large-language-model rebuild of Siri without a firm release date. Baird analyst William Power said Apple "plans on releasing Siri AI beta later this year, with no concrete timing of a full release," adding, "We think that's contributing to the intraday sell-off." UBS analyst David Vogt said he does not expect the features to be a "demand game changer" for Apple hardware.

Hike back on table

Money markets are pricing a 98.2% chance the Federal Reserve holds rates steady at next week's meeting, according to the CME's FedWatch tool, but traders now see a roughly 40% chance of a hike by the October meeting. Economists surveyed by Dow Jones expect the May Consumer Price Index due Wednesday to show annual inflation at 4.2%, the first 4-handle since May 2023 and well above the 2.4% rate that prevailed before the U.S.-Iran war. Core inflation is projected at 2.9%.

The hawkish drift has flushed safe havens. Spot gold fell 2.4% to about $4,161.63 an ounce, spot silver lost 2% to $64.01, and bitcoin slid 1.3% to $61,049.25. "The escalation in the Middle East is pushing oil higher and lifting inflation risks, which in turn is reinforcing expectations that central banks stay tighter for longer," said Ewa Manthey, commodities strategist at ING. Liz Ann Sonders, chief investment strategist at Charles Schwab, said the story has widened. "It's not just an oil story, it's a money supply story, and it's increasingly an AI story," she said.

Shorts pile on

Last week's selloff in chipmakers opened the current leg lower, and options traders are betting it will get worse. Of the almost $350 million in premium that changed hands on the VanEck Semiconductor ETF on Tuesday, $260 million was tied to puts, SpotGamma data show, and put volume outran call volume four to one. "Friday's selloff was never going to be a one-hit wonder," said Don Kaufman, co-founder of TheoTrade.

Other side

Not everyone reads the tape as broken. CNBC's Oliver Renick laid out "two reasons for optimism after Tuesday's whipsaw market sell-off," and Dan Coatsworth, head of markets at AJ Bell, said the Nasdaq's late recovery limited the spillover. "Yesterday's selloff on Wall Street didn't turn out to be too disastrous, with the Nasdaq clawing back much of its losses by the end of the session," Coatsworth wrote in a Wednesday note. "That has helped to avoid contagion on the markets, albeit investors are slightly nervous about the heightened volatility this week."

A hotter print at 8:30 hands the bears the next leg. A cooler one gives the bulls room to argue Tuesday's drop was the flush, not the start.