New York:Global markets experienced a downturn on Thursday as geopolitical tensions in the Middle East and concerns surrounding artificial intelligence (AI) investments weighed heavily on investor sentiment.
According to Anadolu Agency – English, US President Donald Trump's statements on potentially increasing military pressure on Iran after the midterm elections, along with Yemen's Houthi group's ongoing attacks on Saudi Arabia, contributed to the heightened geopolitical concerns. This environment pushed December-delivery Brent crude prices up by 0.7% to $114 a barrel.
Amid these tensions, chipmakers worldwide saw significant losses. Intel's shares fell by 8.04%, AMD by 8.1%, Qualcomm by 2.88%, Broadcom by 4.31%, and Micron Technology by 6.26%. The uncertainty surrounding the profitability of AI investments and their potential to generate returns has led to increased volatility in the shares of semiconductor, data center, and cloud computing companies.
Analysts noted that the increasing costs of building data centers and expanding computing capacity, driven by rising global borrowing costs, are making new projects less economically appealing. In response, investors moved away from tech and AI stocks, opting for safer investments such as government bonds, which led to a drop in the US 10-Year Treasury yield to 4.96%.
Additionally, the US dollar fell by 0.2% to 101.5, marking its third consecutive day of decline, influenced by decreasing Treasury yields and a rising interest in alternative currencies. The S&P 500 fell by 1.21%, the Nasdaq Composite by 2.6%, while the Dow Jones Industrial Average remained flat on Thursday.
European markets mirrored this negative trend, affected by civil unrest in France and rising oil prices. France's 10-year bond yield reached its highest level since 2002 at 5.07%, further pressured by street protests. Various European indexes, including the UK's FTSE 100 and Germany's DAX 40, saw declines, while Friday's opening showed mixed trends.
The trend continued in Asian markets, with notable declines in Japan's Nikkei 225, China's Shanghai Composite, and South Korea's Kospi. However, Hong Kong's Hang Seng index bucked the trend with a 0.7% increase. Japan's inflation data also revealed core inflation rising above the BoJ's target, fueling expectations of a potential rate hike.