Global markets displayed volatility as a significant tech sector sell-off, fueled by concerns over artificial intelligence investment scarcity, weighed heavily on major indices. U.S. futures were mixed, while bond yields eased but oil prices surged due to escalating geopolitical tensions. International economic reports, such as strong L’Oréal sales and declining U.K. retail sales, added to the complex market picture, alongside key corporate earnings and trade developments worldwide.
Global equity markets experienced a volatile Friday as concerns surrounding the artificial intelligence (AI) sector triggered a significant tech sell-off, impacting sentiment across continents. U.S. equity futures were mixed in early trading; S&P 500 futures remained flat, Dow Jones Industrial Average futures dipped 0.23%, while Nasdaq-100 futures managed a slight gain of 0.25%.
The previous day saw the S&P 500 sink 1.2%, its worst session since July, and the tech-heavy Nasdaq Composite slide 2.6%, marking its steepest decline since June. The Dow Industrials, however, managed to close marginally higher, bucking the trend.
The tech sector's downturn was largely attributed to growing worries that the AI investment boom might be faltering in the short term. Major tech players felt the impact: Nvidia dropped 4.4%, Alphabet fell 3.2%, and Advanced Micro Devices (AMD) declined a substantial 8.1%. Nvidia CEO Jensen Huang expressed concerns about capital scarcity within the AI buildout, particularly in the 'neocloud' segment.
While some analysts like Ed Yardeni of Yardeni Research described the AI trade as a "bubble," he suggested that a "depressurization" could be beneficial for the economy, pointing to competition from the bond market for capital. Indeed, bond yields eased on Thursday, with the 10-year Treasury sliding 18.5 basis points to 4.961%, the largest one-day decline since March 2023. The 30-year yield fell 15 basis points, and the 2-year yield dropped 17.5 basis points.
Adding another layer of market complexity, Brent crude prices spiked 4% to $113.17, reaching their highest settle since May. This surge followed reports of potential renewed attacks on Iran by the U.S. and Israel, escalating regional geopolitical tensions. For the week, the S&P 500 was poised for a slim gain, the Nasdaq was down 0.5%, and the Dow was tracking a 1.7% advance. Traders also anticipated the final reading of the University of Michigan's consumer sentiment report.
International Market Developments
European Markets Open Lower
European stock markets opened lower on Friday. The pan-European Stoxx 600 slid 0.19%, with Germany's DAX leading losses down 0.40%, France's CAC 40 dropping 0.25%, and the U.K.'s FTSE 100 slipping 0.10%. Oil and gas stocks, however, posted morning gains, rising 1.24%.
Asia-Pacific Markets End Mixed
Asia-Pacific markets closed mixed. South Korea's Kospi index added 0.3%, but its tech-heavy Kosdaq index declined 1.62%. Japan's Nikkei 225 lost 0.34%, while Australia's S&P/ASX 200 was flat. China's CSI 300 rose 1.71% for the day but was set for its 11th consecutive weekly decline.
L'Oréal Sales Exceed Forecasts
French cosmetics giant L'Oréal reported better-than-expected third-quarter sales, totaling 35.33 billion euros ($39.6 billion), representing an adjusted like-for-like growth of 7.7%. Strong demand for premium beauty products drove a 9% sales rise in Europe and a 19.5% increase in South Asia and the Middle East. Shares climbed over 3.7%.
U.K. Retail Sales Fall More Than Expected
U.K. retail sales declined 0.4% in September, a steeper drop than the forecasted 0.1% decline, partially reversing August's 0.7% rise. Despite the monthly fall, retail sales volumes increased 0.7% in the third quarter. The data highlights a fragile consumer backdrop ahead of the government's budget announcement.
Saab's Orders Triple on Ukraine Deal
Swedish defense contractor Saab reported a more than threefold increase in new orders for the third quarter, reaching 65.8 billion Swedish kronor ($6.6 billion). This surge was primarily driven by a 24.6 billion kronor contract to supply 16 Gripen E fighter jets to Ukraine, with deliveries expected between 2029-2030.
SGX CEO Loh Boon Chye to Step Down
Singapore Exchange (SGX) CEO Loh Boon Chye announced plans for an eventual transition from his role. His contract extends until mid-2027, allowing ample time for succession planning. Under his leadership since 2015, SGX's share price has soared 216%, net profit after tax is up 112%, and market capitalization has grown 252%.
India's Trade Deals Progress
India's Commerce and Industry Minister Piyush Goyal indicated that a trade deal with the European Union is expected to be signed by the end of 2026 and operational by March 2027. He hailed it as the "fastest trade deal" the EU has concluded. Separately, U.S. Secretary of State Marco Rubio affirmed that Washington would "shortly" finalize its own trade deal with India.
SK Hynix Halts Solidigm IPO Plans
South Korean chipmaker SK Hynix decided to halt its review of a potential U.S. initial public offering (IPO) for its subsidiary Solidigm. Citing recent capital market conditions and semiconductor stock corrections, the company is now exploring alternative funding options for a new U.S. semiconductor fabrication plant.
Japan's Core Inflation Reaches 2.1%
Japan's core inflation in September hit 2.1%, its highest level this year, exceeding analysts' forecasts. This was driven by rising import costs due to a weak yen and the indirect impact of higher energy prices. Headline inflation also stood at 2.1%, while the Bank of Japan's preferred 'core-core' gauge was 2.4%.
