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Oil Spike, AI Jitters, Middle East Fears Rattle Global Markets
(MENAFN) Stock markets around the world slid on Tuesday as a punishing sell-off in bonds collided with mounting doubts about artificial intelligence firms and escalating violence in the Middle East, leaving investors bracing for a pivotal stretch of central bank decisions.
Oil and Bonds Under Pressure
Crude prices jumped after Iranian-backed Houthi forces in Yemen struck Saudi Arabia, reigniting fears over regional supply. November-delivery Brent crude climbed 1.7% to $107.4 a barrel on the news.
US President Donald Trump said he expects oil prices to ease once the conflict with Iran is resolved.
The surge in energy prices rippled straight into fixed income. The US 10-year Treasury yield jumped to 5.03%, its highest mark since July 2007, as traders grew wary that stubborn inflation could take root for longer than expected.
That backdrop has strengthened bets that the Federal Reserve will need to keep policy tight. The central bank opens a two-day meeting on Tuesday, and markets are heavily pricing in a rate increase — what would be its first hike since July 2023.
Elsewhere in currency and metals markets, the dollar edged up 0.1% to 99.6, while gold also rose 0.1% to $4,305 an ounce — a notable move given the simultaneous strength in the dollar, oil and bond yields.
AI Sell-Off Deepens
Fresh anxiety over the pace of artificial intelligence development added another layer of pressure. It remains unclear whether AI companies will actually slow their rollout of new technology, particularly with the US and China locked in fierce competition for dominance in the sector.
Trump dismissed warnings that AI could spiral out of control, calling the idea "a hoax."
Separately, the US Treasury Department added Russia's VTB Bank to its sanctions roster, accusing the lender of dodging restrictions imposed under Washington's Operation Economic Outcast.
Wall Street Chipmakers Hit Hard
The New York Stock Exchange closed lower on Monday as fears over an AI slowdown slammed semiconductor stocks. Nvidia slid 3.4%, AMD dropped 4.4%, Broadcom fell 4.8%, Intel sank 5.6%, and Marvell Technology tumbled 7.3%.
Broader indexes followed suit: the Dow Jones Industrial Average lost 0.29%, the S&P 500 slipped 0.48%, and the Nasdaq fell 0.56%. Futures pointed to further losses when US markets opened Tuesday.
Europe Mixed as Energy Stocks Buck the Trend
European markets mostly traded lower as climbing oil prices dented investor appetite and dragged tech shares down further. Dutch chip-equipment maker ASML dropped 6.1%, while Germany's Infineon Technologies slumped 7.7%.
Analysts noted that Europe's tech sector may be less exposed to the AI slowdown narrative than its counterparts in the US and Asia. Mining shares also weakened on falling copper prices.
The UK was the lone bright spot, with the FTSE 100 gaining 0.44% on Monday as rising crude prices lifted energy stocks. Germany's 10-year bond yield, meanwhile, climbed to 3.55% — its highest level since 2009.
Elsewhere on the continent, Italy's FTSE MIB 30 dropped 1.68%, France's CAC 40 fell 0.76%, and Germany's DAX 40 eased 0.5%. European indexes opened Tuesday in the red.
Asia Closes Lower Amid Weak Chinese Data
Asian markets ended Monday's session broadly lower in step with global sentiment. Fresh economic data out of China added to the gloom: retail sales rose just 0.4% year-on-year in August, missing forecasts, while fixed-asset investment fell 7.2% — a sharper contraction than analysts had anticipated.
China's unemployment rate came in at 5.3%, higher than expected, even as industrial production rose 5.2% in August. The mixed readings are likely to intensify pressure on Beijing to roll out additional fiscal stimulus as the economy continues to struggle on multiple fronts.
South Korea's Kospi fell 0.6%, Hong Kong's Hang Seng dropped 0.2%, China's Shanghai Composite eased 0.1%, and Japan's Nikkei 225 slipped 0.1% by Monday's close.
Oil and Bonds Under Pressure
Crude prices jumped after Iranian-backed Houthi forces in Yemen struck Saudi Arabia, reigniting fears over regional supply. November-delivery Brent crude climbed 1.7% to $107.4 a barrel on the news.
US President Donald Trump said he expects oil prices to ease once the conflict with Iran is resolved.
The surge in energy prices rippled straight into fixed income. The US 10-year Treasury yield jumped to 5.03%, its highest mark since July 2007, as traders grew wary that stubborn inflation could take root for longer than expected.
That backdrop has strengthened bets that the Federal Reserve will need to keep policy tight. The central bank opens a two-day meeting on Tuesday, and markets are heavily pricing in a rate increase — what would be its first hike since July 2023.
Elsewhere in currency and metals markets, the dollar edged up 0.1% to 99.6, while gold also rose 0.1% to $4,305 an ounce — a notable move given the simultaneous strength in the dollar, oil and bond yields.
AI Sell-Off Deepens
Fresh anxiety over the pace of artificial intelligence development added another layer of pressure. It remains unclear whether AI companies will actually slow their rollout of new technology, particularly with the US and China locked in fierce competition for dominance in the sector.
Trump dismissed warnings that AI could spiral out of control, calling the idea "a hoax."
Separately, the US Treasury Department added Russia's VTB Bank to its sanctions roster, accusing the lender of dodging restrictions imposed under Washington's Operation Economic Outcast.
Wall Street Chipmakers Hit Hard
The New York Stock Exchange closed lower on Monday as fears over an AI slowdown slammed semiconductor stocks. Nvidia slid 3.4%, AMD dropped 4.4%, Broadcom fell 4.8%, Intel sank 5.6%, and Marvell Technology tumbled 7.3%.
Broader indexes followed suit: the Dow Jones Industrial Average lost 0.29%, the S&P 500 slipped 0.48%, and the Nasdaq fell 0.56%. Futures pointed to further losses when US markets opened Tuesday.
Europe Mixed as Energy Stocks Buck the Trend
European markets mostly traded lower as climbing oil prices dented investor appetite and dragged tech shares down further. Dutch chip-equipment maker ASML dropped 6.1%, while Germany's Infineon Technologies slumped 7.7%.
Analysts noted that Europe's tech sector may be less exposed to the AI slowdown narrative than its counterparts in the US and Asia. Mining shares also weakened on falling copper prices.
The UK was the lone bright spot, with the FTSE 100 gaining 0.44% on Monday as rising crude prices lifted energy stocks. Germany's 10-year bond yield, meanwhile, climbed to 3.55% — its highest level since 2009.
Elsewhere on the continent, Italy's FTSE MIB 30 dropped 1.68%, France's CAC 40 fell 0.76%, and Germany's DAX 40 eased 0.5%. European indexes opened Tuesday in the red.
Asia Closes Lower Amid Weak Chinese Data
Asian markets ended Monday's session broadly lower in step with global sentiment. Fresh economic data out of China added to the gloom: retail sales rose just 0.4% year-on-year in August, missing forecasts, while fixed-asset investment fell 7.2% — a sharper contraction than analysts had anticipated.
China's unemployment rate came in at 5.3%, higher than expected, even as industrial production rose 5.2% in August. The mixed readings are likely to intensify pressure on Beijing to roll out additional fiscal stimulus as the economy continues to struggle on multiple fronts.
South Korea's Kospi fell 0.6%, Hong Kong's Hang Seng dropped 0.2%, China's Shanghai Composite eased 0.1%, and Japan's Nikkei 225 slipped 0.1% by Monday's close.
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