Global markets tumble amid fears of reigniting Middle East tensions, AI concerns
- Trump’s statements implying military escalation in Middle East post-midterms, intensifying tensions between Houthis, Saudi Arabia drive up oil prices
Loading…
Loading…
- Trump’s statements implying military escalation in Middle East post-midterms, intensifying tensions between Houthis, Saudi Arabia drive up oil prices
By Ali Canberk Ozbugutu and Emir Yildirim
ISTANBUL (AA) - Global markets traded lower on Thursday due to mounting geopolitical tensions in the Middle East and growing concerns over artificial intelligence (AI).
US President Donald Trump made some statements implying that he could increase the military pressure on Iran after the Nov. 3 midterm elections, Yemen's Houthi group continues its attacks on Saudi Arabia.
December-delivery Brent crude climbed 0.7% to $114 a barrel, while chipmakers worldwide lost shares amid mounting concerns over the profitability of massive AI investments.
Shares of Intel fell 8.04%, AMD lost 8.1%, Qualcomm shrank 2.88%, Broadcom dropped 4.31%, and Micron Technology declined 6.26%.
Uncertainties over the profitability of AI investments and their unclear potential to turn a profit caused investors to be cautious, causing volatility in the shares of semiconductor, data center, and cloud computing companies.
As global borrowing costs rise, building data centers and expanding compute capacity increasingly become more expensive, and thus eroding the economic appeal of new projects, analysts say.
Meanwhile, the number of initial jobless claims in the US fell to 194,000 in the week ending Oct. 17, below estimates.
Investors shifted away from tech and AI stocks and flocked towards safe haven assets like government bonds, driving down the US 10-Year Treasury yield below 5% for the first time in about a month.
The US 10-Year Treasury yield dropped about 16 basis points to 4.96% on Thursday.
The US dollar fell 0.2% to 101.5 on Thursday, dropping for the third consecutive day, amid declining Treasury yields and rising demand for alternative currencies. The dollar index was up 0.1% at 101.6 in early trading on Friday.
Gold dropped 2.8% to $4,024 per ounce on Thursday amid rising oil prices pressuring the precious metal by fueling inflation concerns and expectations of higher interest rates for a longer period. It traded flat at $4,022 per ounce on Friday.
The S&P 500 fell 1.21% and the Nasdaq Composite declined 2.6%, while the Dow Jones Industrial Average traded flat on Thursday. American indexes opened Friday negative.
Meanwhile, European stock markets also traded negatively on Thursday amid the ongoing civil unrest in France and surging oil prices.
France’s 10-year bond yield surged to its highest since 2002 at 5.07% as street protests continued threatening fiscal discipline.
IT shares suffered due to security vulnerabilities in the PHP programming language that a huge portion of the global internet infrastructure uses and depends on.
The UK's FTSE 100 dropped 0.26%, Italy's FTSE MIB 30 declined 2.54%, Germany's DAX 40 fell 1.07%, and France's CAC 40 was down 1.39% on Thursday. European indexes opened Friday on a mixed trend.
The negative trend in US and European stock markets also spilled over into Asian equity markets, except for Hong Kong.
Uncertainties over the sustainability of AI investments fueled concerns about a potential slowdown in data center spending, driving the selling pressure across the markets in the region.
South Korean chipmakers and Japanese tech firms suffered selloffs after the decline in American tech stocks.
Japan’s inflation came in within estimates at 2.1% on an annual basis, according to data released on Friday.
Core inflation rose above 2% in September for the first time in nine months, above the Bank of Japan’s (BoJ) target, fueling rate hike expectations.
Near Friday’s close, Japan’s Nikkei 225 declined 0.7%, China’s Shanghai Composite fell 0.3%, and South Korea’s Kospi was down 0.8%. Hong Kong's Hang Seng, however, climbed 0.7%.
Ali Canberk Özbuğutu