New York:Investors remain cautious amidst political uncertainty surrounding the US midterm elections and concerns about the profitability of extensive artificial intelligence (AI) investments. This comes as optimism about peace in the Middle East sends markets into a state of flux.
According to Anadolu Agency – English, AI and tech stocks faced selling pressure on Monday as developments intensified existing concerns. Marvell Technologies announced a plan to acquire optical networking firm Lumentum entirely through a stock swap valued at approximately $115 billion. Following this announcement, Marvell's shares plummeted by 12.72%, and Lumentum's shares fell by 18.59%.
Oracle also experienced a decline, with shares dropping 8.76% after announcing plans to issue $10 billion in stock and another $10 billion in bonds to fund AI investments. Analysts attribute declines in the semiconductor sector to uncertainty over the profitability of massive venture capital expenditures, alongside expectations of renewed global monetary policy tightening.
Recent macroeconomic data from the US indicates persistent inflationary pressures. The Institute for Supply Management's manufacturing Purchasing Managers' Index rose to 55.5 in October, suggesting continued sector growth. This strong economic activity has fueled expectations of a Federal Reserve rate hike in December, with the likelihood increasing to 75%.
US labor market data, particularly the nonfarm payrolls report set for release Friday, is drawing significant attention, alongside statements from Fed Vice Chair Michelle Bowman. Meanwhile, de-escalation efforts in the Middle East have fueled optimism, with US President Donald Trump's reported refusal to attack Iran after the midterms contributing to a reduction in the war premium.
European stock markets showed positive activity on Monday as talks in the Middle East increased risk appetite. Falling energy prices benefited airlines and tourism firms, with notable gains for Air France-KLM, IAG, and Ryanair. However, European indexes began Tuesday on a negative trend.
In Asia, markets largely traded lower on Tuesday, except in Hong Kong, as South Korean semiconductor firms experienced significant losses. China's government announced financial support measures to bolster its stock market, including swap transactions and potential easing of margin requirements. Near the close of trading, China's Shanghai Composite and South Korea's Kospi faced declines, while Hong Kong's Hang Seng saw gains.