Global — Stock markets around the world fell on Thursday as concerns over technology companies’ spending plans and the long-term profitability of artificial intelligence investments overshadowed optimism about corporate earnings.
MSCI’s All-World index dropped 0.4%, putting it on track for its steepest daily decline in two weeks. Technology stocks weakened across Asia and Europe, affecting markets in Seoul, Tokyo, Amsterdam and Paris.
Meta initially provided some support for investor sentiment after reporting better-than-expected third-quarter revenue late Wednesday. However, optimism diminished when the owner of Facebook and Instagram announced plans to issue a new class of non-voting shares, prompting questions about its rising capital needs.
Investors are increasingly scrutinizing whether the enormous sums technology companies are spending on artificial intelligence development will deliver adequate returns. AI-related earnings have helped drive US equities higher and influenced markets elsewhere, but growing concerns about costs and future profitability have introduced greater uncertainty.
“There are lots of cross currents in markets at the moment, which are grappling for a narrative right now,” said Ben Laidler, head of macro and equity strategy at Bradesco BBI.
Laidler also cautioned that the earnings outlook underpinning investment in artificial intelligence could encounter difficulties.
In Europe, the STOXX 600 declined 1%, with technology-linked companies such as ASML, Schneider Electric and Siemens Energy contributing to the weakness. Futures contracts suggested that major US stock indexes could open between 1% and 2% lower.
Meta shares slipped around 0.8%, while Tesla lost nearly 5% in premarket trading. Tesla had reported its earnings and lowered its spending forecast as discussions continued about a potential merger with SpaceX.
Oil markets faced additional pressure from geopolitical developments. Brent crude advanced 3% to $112 a barrel, nearing a five-month high after further Houthi attacks in Saudi Arabia raised concerns about an expanding regional conflict and possible disruptions to supplies.
Rising oil prices have complicated the outlook for companies and investors. Higher energy costs can increase business expenses and add to inflationary pressures, potentially weighing on economic growth and influencing central-bank policy decisions.
Despite renewed inflation concerns, investors sought the relative safety of government bonds amid fears about the economic fallout from geopolitical tensions. US Treasury yields declined, with the yield on the 10-year note falling 7 basis points to 5.075%. It dropped below the yield on French government bonds for the first time in 13 years.
French government debt has come under considerable pressure during October, sending yields above 5% for the first time since 2002. Investors are evaluating the government’s capacity to rein in public spending and manage social unrest.
Foreign exchange markets also reflected changing investor expectations. The euro traded at around $1.1241, while the dollar index edged down 0.1%. The dollar fell 0.7% against the yen to 157.1 after Bank of Japan Deputy Governor Ryozo Himino signaled openness to raising borrowing costs.
Elsewhere in Asia, the Bank of Korea kept its benchmark interest rate steady at 3.00%, while the Korean won traded at 1,324 per dollar.
Gold prices declined despite the uncertain market backdrop, dropping 1.2% to $4,090 an ounce. Cryptocurrencies also weakened, with Bitcoin and ether each falling 3% to $82,000 and $2,412, respectively.
Thursday’s trading underscored the competing pressures facing global markets, including uncertainty over returns from AI investment, rising energy prices, geopolitical risks and evolving expectations for interest rates.
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