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AI jitters hit tech as haven assets rally

Equity markets were under pressure midweek as mounting concerns over the impact of AI on traditional software and data-driven business models weighed on tech shares in the US, Europe and parts of Asia. While Wall Street’s main indices finished off their intraday lows, the rotation out of semiconductor and AI-related growth stocks into more cyclical and value-oriented sectors continued, and European bourses also closed slightly lower amid steep losses in tech and media names. In Asia, broader indices were mixed as weakness in software and IT services was offset by gains elsewhere in the region. Meanwhile, renewed tensions between the US and Iran pushed gold back above the USD 5000 mark and lifted oil prices. The US dollar remained largely stable, while US Treasury yields were marginally higher across the curve.

  • Date
  • Author Shane Strowmatt, Senior Investment Writer
  • Reading time 5 minutes

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Asian equity markets were uneven on Wednesday after sharp declines in US and European shares, as worries that advances in artificial intelligence could disrupt traditional software, data analytics and professional services firms deepened. Regional technology and software names such as China’s CSI Software Services Index, Hong Kong-listed tech giants and Japanese groups Dentsu, Nomura Research Institute and Nintendo dropped sharply. Japan’s Nikkei 225 was trading 0.6% lower, while Korea’s Kospi was 1.6% higher and Australia’s S&P/ASX 200 was up 0.8%. Hong Kong’s Hang Seng Index was 0.3% firmer and mainland China’s CSI 300 was trading 0.8% higher, while India’s Nifty 50 was little changed.

US stocks trim intraday losses

US stock indices reduced steep losses on Tuesday, with the S&P 500 closing 0.8% lower and the Dow Jones Industrial Average down 0.3%, while the technology-heavy Nasdaq 100 still fell 1.6% to 25,338.62 points, weighed by a roughly 20% slide in payments group Paypal to its lowest level in almost nine years. Investors shifted out of semiconductor and artificial intelligence-related growth stocks and into more cyclical and value-oriented sectors, as confidence in the robust US economy encouraged a broader market focus. Retail giant Walmart rose 2.9%, lifting its market capitalisation above USD 1 trillion for the first time. Supporting sentiment was the end to a four-day partial shutdown of the US federal government on Tuesday after the House of Representatives narrowly approved a funding bill by 217 to 214 votes and US President Donald Trump signed it into law later the same day.

European stocks end slightly lower

Major European stock markets recorded moderate declines on Tuesday, with the Euro Stoxx 50 falling 0.3% and the Swiss SMI 0.3% lower, as technology and media shares weighed on the region. Technology stocks tracked weakness in US peers after a disappointing quarterly update from US payments group Paypal, which also pressured European competitor Adyen, whose shares fell 7%. Media companies dropped after US firm Anthropic launched an artificial intelligence-based tool for in-house legal teams, pushing specialist publishers Relx and Wolters Kluwer down more than 14% and 12.7% respectively.

Gold and oil climb on Iran tensions

Gold and oil prices advanced on Wednesday as renewed tensions between the US and Iran supported safe-haven and supply-risk premiums. Spot gold rose back above USD 5000 per ounce, trading around USD 5060 per ounce and extending a rebound after last week’s drop of more than USD 1000 from a record level near USD 5600. The rebound comes despite market expectations that incoming Federal Reserve chair Kevin Warsh could adopt a less dovish stance, which had recently strengthened the US dollar. Brent crude oil was changing hands near USD 67.70 per barrel and West Texas Intermediate around USD 63.70, both up roughly 1%, helped by reports of a downed Iranian drone and an incident involving a US-linked tanker near key shipping lanes, as well as a sharp, weather-related draw in US crude inventories.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from AbbVie, Alphabet, Boston Scientific, CME Group, Eli Lilly, GSK, McKesson, Novartis, Novo Nordisk, QUALCOMM, Santander, Uber, and UBS.

Economic data in focus: Purchasing Managers’ Indices from Italy (09:45), France (09:50), Germany (09:55), UK (10:30) and US (15:45); US ADP National Employment Report (14:15), US ISM Services Purchasing Managers’ Index (16:00).

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Editor: Alessandro Fezzi
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