Global Markets Experience Volatility Amid AI Concerns
NEW YORK, Oct 15 (Reuters) – The index tracking global equity markets concluded the trading session on Thursday with little movement, as trepidations surrounding artificial intelligence (AI) expenditures and escalating interest rates incited further declines in both technology and semiconductor sectors.
Investors remain apprehensive regarding the high valuations of firms within the AI landscape, with increasing skepticism about the endurance of demand for data centers echoing among market participants.
On Wall Street, the Philadelphia Semiconductor index saw a decline of nearly 1%. In contrast, the benchmark S&P 500 and the Nasdaq oscillated back from early losses to finish positively, buoyed primarily by gains in healthcare and materials sectors, while the Dow experienced a 1% uptick.
The Dow Jones Industrial Average ascended by 1.08%, the S&P 500 climbed by 0.33%, and the Nasdaq Composite registered a modest gain of 0.08%.
“There’s unmistakably a wave of investor anxiety about the future trajectory of AI,” remarked Amanda Agati, Chief Investment Officer at PNC Financial Services Group.
A severe selloff in technology stocks reverberated across Asian markets overnight. The KOSPI index of South Korea, a significant player due to its leading chip manufacturers, plummeted nearly 8%, while the Nikkei 225 index experienced a near 5% decline.
“This selloff illustrates investor caution towards the more susceptible sectors of the AI ecosystem, as tech executives recommend a more measured pace in developing frontier models,” stated Rong Ren Goh, a portfolio manager at Eastspring Investments.
“Markets are increasingly scrutinizing the sustainability and growth trajectory of demand for computing power. These concerns are exacerbated by rising financing costs, which elevate the investment thresholds for capital-intensive AI infrastructure ventures.”
MSCI’s broadest index of Asia-Pacific shares, excluding Japan, plummeted by 3.12%, marking its most significant single-day decrease since late July. The global MSCI gauge of stocks dipped by 0.06%.
European equities reversed earlier session losses, ultimately concluding with a gain of 0.38%.
BOND YIELDS FALL
The yield on the benchmark 10-year US Treasury notes retreated towards the 5% mark, experiencing its largest daily decline in over a year.
In September, US producer prices exhibited their most significant rise in four and a half years, driven by increased costs for goods and services, indicating that inflationary pressures are permeating beyond energy sectors.
Recent data on US retail sales revealed an unexpected increase last month, predominantly fueled by elevated gasoline prices, though the information also indicated that consumer spending elsewhere remained subdued.
The yield on the benchmark US 10-year notes decreased by 12.58 basis points, settling at 5.064%.
DOLLAR DROPS
The inflation data released on Wednesday recalibrated expectations regarding the Federal Reserve’s interest rate trajectory, with traders initially contemplating near-equal probabilities of a rate hike this month, before retracting those speculations.
Fed funds futures are presently reflecting a 73% likelihood that the US central bank will maintain its current rates following the upcoming two-day meeting set for October 28, a figure that has seen little variation since the week began, according to the CME Group’s FedWatch tool.
In currency markets, the dollar has retreated from an 18-month high. It decreased by 0.21% against the yen, now trading at 157.98 yen, while the euro appreciated by 0.57% to $1.122 and the pound rose by 0.63%, reaching $1.33.
In oil markets, Brent crude slipped by 0.13%, concluding at $105.92 a barrel as traders balanced the repercussions of US sanctions relief on supply against shipping attacks occurring in the Strait of Hormuz.
Source link: Finance.yahoo.com.
