Stocks Slide on AI Concerns & Oil Rallies - Europe Market Wrap
Stocks fell globally as disappointing tech earnings fuelled doubts over whether heavy AI investment can deliver sufficient returns, while escalating Middle East tensions pushed oil prices higher. Nasdaq 100 futures dropped 1.7%, threatening to erase much of the index’s 2.2% weekly gain, while S&P 500 futures fell 1%. Lam Research plunged more than 7% after a disappointing outlook, while Tesla declined 3.8% following cuts to spending plans. Meta also weakened despite showing early signs of returns from its AI investments. Brent crude approached $112 a barrel after the US ordered some diplomats to leave Saudi Arabia amid threats from Houthi militants. The broader flight from risk sent Bitcoin to its biggest two-week decline, while 10-year Treasury yields fell six bps. The Yen and Swiss Franc strengthened on haven demand as investors reassessed geopolitical risks alongside concerns over stretched tech valuations. European stocks also declined, with the Stoxx 600 falling 0.9% as banks and mining shares led losses. Hermès dropped more than 7% after reporting stagnant sales growth in a region that includes China. Chinese equities entered bear-market territory, with the CSI 300 falling 1.
Stocks fell globally as disappointing tech earnings fuelled doubts over whether heavy AI investment can deliver sufficient returns, while escalating Middle East tensions pushed oil prices higher. Nasdaq 100 futures dropped 1.7%, threatening to erase much of the index’s 2.2% weekly gain, while S&P 500 futures fell 1%. Lam Research plunged more than 7% after a disappointing outlook, while Tesla declined 3.8% following cuts to spending plans. Meta also weakened despite showing early signs of returns from its AI investments.
Brent crude approached $112 a barrel after the US ordered some diplomats to leave Saudi Arabia amid threats from Houthi militants. The broader flight from risk sent Bitcoin to its biggest two-week decline, while 10-year Treasury yields fell six bps. The Yen and Swiss Franc strengthened on haven demand as investors reassessed geopolitical risks alongside concerns over stretched tech valuations. European stocks also declined, with the Stoxx 600 falling 0.9% as banks and mining shares led losses.
Hermès dropped more than 7% after reporting stagnant sales growth in a region that includes China. Chinese equities entered bear-market territory, with the CSI 300 falling 1.8% on Thursday, extending its decline from a June high to 20%. Hong Kong shares also suffered heavy selling, reflecting persistent weakness across major Chinese companies and tech firms. European bond markets remained under pressure, with German bunds gaining while French yields continued rising.
The French 10-year yield premium over Germany reached 175 bps, its highest since 2011. Investors are increasingly demanding evidence that AI spending can translate into stronger growth, monetisation and earnings. With no major tech earnings scheduled for another week, Singular Bank’s Roberto Scholtes expects the rotation away from semiconductors and other AI-linked stocks to continue.