LONDON, UK: A sharp selloff in technology stocks has raised concerns about the resilience of global financial markets, with volatility surging, credit risks increasing and investors seeking safer assets as confidence in the artificial intelligence boom weakens.

The turmoil has spread beyond stock markets, prompting investors and regulators to monitor signs of financial stress, although bond and funding markets have so far remained relatively stable.

The technology-heavy Nasdaq 100 recovered nearly 2 percent on November 6 after plunging more than 6 percent the previous day, but investors remained cautious about the outlook for AI-related investments.

Policymakers have repeatedly warned about the potential consequences of an unwinding of the AI investment boom. Several market indicators are now showing signs of heightened concern, though they have not reached levels associated with severe financial disruption.

Wall Street's VIX volatility index, widely regarded as a measure of investor fear, climbed above 28 on November 5, its highest level since late March, and remained near that level the following day.

The index surged more than 40 percent during the week, although the increase remained relatively contained compared with the market turmoil following the April 2025 US tariff announcements and the August 2024 selloff.

Europe's equivalent volatility index also reached its highest level since May.

"It's still early days," said Idanna Appio, a portfolio manager at First Eagle Investments. "My concern would be if we see more spikes in volatility, more stress, real issues with the ability to access markets. Those will be the things that...I'll be watching."

Concerns have also emerged in credit markets, particularly among companies involved in AI infrastructure.

The cost of insuring debt issued by AI cloud computing company CoreWeave against default has surged into distressed territory, with five-year credit default swap spreads exceeding 1,000 basis points and reaching record highs.

The increase has made CoreWeave an important indicator of investor anxiety surrounding the AI sector.

Credit default swap spreads for SpaceX and Intel also rose during the week.

Meanwhile, the additional yield investors demand for holding US high-yield corporate bonds, commonly known as junk bonds, climbed to its highest level since the market disruption caused by the April 2025 tariffs.

For companies with credit ratings of CCC or lower, that premium approached its highest level since 2020, according to ICE BofA indices.

Investors have also shown signs of moving toward safer assets, although daily market movements have remained relatively modest.

Yields on benchmark 10-year US Treasury bonds have fallen by 50 basis points from peaks above 5 percent reached in October, when concerns about government debt, inflation and competition for capital from technology companies weighed on bond markets.

The US dollar gained 0.6 percent as of 1500 GMT on November 6, while currency markets otherwise remained relatively subdued.

Three-month euro cross-currency basis swaps, which indicate the relative cost of obtaining dollar funding through currency swaps, briefly fell to minus 8 basis points on November 5, their lowest level since late 2023.

The measure recovered slightly to around minus 6 basis points the following day, after signaling increased demand for dollar funding.

Bank of America's Flow Show report showed that cash funds attracted $140 billion in the week ending November 4, the seventh-largest weekly inflow on record.

Despite the growing unease, government bond markets have not experienced the severe strains seen during the COVID-19 pandemic or the market disruption following the April 2025 tariff announcements.

The MOVE index, which measures volatility in the US Treasury market, reached a six-month high in October but has since declined.

Other indicators of bond-market liquidity and funding conditions, including US swap spreads, have also remained relatively calm.

The contrasting signals suggest that while the AI-related stock selloff has increased investor anxiety and credit market pressures, broader financial markets have so far avoided the more serious disruptions seen during previous periods of turmoil.