Macro Update
Asian equities retreat amid AI financing concerns: Fears over the cost of funding AI investment and persistently high energy prices left Asia-Pacific shares excluding Japan down 0.16%, with the index on track for a weekly loss of more than 1%. Japan’s Nikkei fell over 1%, while SoftBank slid 5.4% after reports that OpenAI’s annualised revenue was $20bn below earlier indications.
Wall Street splits as chip stocks slide: The Nasdaq fell 1.25% to 27,193.34 and the S&P 500 shed 0.47% to 7,765.36, while the Dow edged up 0.10% to 51,231.64. Semiconductor shares dropped 3.4%, with Broadcom and Oracle losing more than 4% amid concerns over debt-funded AI spending.
Oil prices ease on hopes of US-Iran talks: Brent crude fell 1.3% to $102.91 a barrel, while WTI slipped to $90.40 after Donald Trump said the US would not attack Iran before the midterm elections and described negotiations as productive. However, Hurricane Isaias had shut in around 62.9% of Gulf of Mexico oil output, leaving Brent on course for a weekly gain.
Euro faces fifth consecutive weekly decline: The single currency recovered to $1.1226 from a 17-month low of $1.1161 as French bond markets stabilised and US Treasury yields eased. Nevertheless, the euro remained down more than 3% over five weeks amid concerns over French debt and social unrest.
Gold rebounds as dollar and Treasury yields retreat: Spot gold climbed 1.1% to $4,177.44 an ounce after hitting a two-month low on Wednesday, supported by a weaker dollar and falling bond yields. Meanwhile, the CME FedWatch tool indicated an 83% probability of a Federal Reserve rate hike in December.
Global bond sell-off keeps yields near multi-decade peaks: The US 10-year Treasury yield held at 5.226%, close to a 24-year high, as rising energy costs, expectations of further rate hikes and mounting government debt sustained pressure on global bond markets. France remained particularly vulnerable ahead of next year’s presidential election.