Global markets mixed amid AI profitability concerns, Middle East tensions
Investors weigh Fed rate hike prospects, rising energy costs and uncertainty over technology sector earnings
Global markets traded mixed Friday as concerns over artificial intelligence profitability, uncertainty surrounding US monetary policy and escalating tensions in the Middle East weighed on investor sentiment.
Questions over whether artificial intelligence company OpenAI can meet its projected annual revenue targets added to concerns about the outlook for the technology sector.
Oracle shares fell 5.5% Thursday, while shares of other AI-related companies also declined.
Investors are now looking ahead to the corporate earnings season beginning next week for further indications of the sector's financial performance.
Meanwhile, tensions in the Middle East continued to influence oil prices despite ongoing US-Iran negotiations mediated by regional countries.
US President Donald Trump said Thursday that Washington would not launch attacks against Iran before the Nov. 3 midterm elections, while also indicating that he did not wish to reach an agreement with Tehran to end the war.
Trump said millions of barrels of oil were passing through the Strait of Hormuz daily and claimed Iran's economy and military had been devastated.
His remarks came amid reports of attacks on vessels in the strategic waterway, while Hurricane Isaias disrupted oil supplies along the US Gulf Coast.
Brent crude futures for December delivery exceeded $104 per barrel Thursday before falling 1.4% to $102.80 on Friday.
Fed rate outlook remains in focus
US Federal Reserve officials continued to signal that further monetary tightening could be needed to bring inflation back to the central bank's 2% target.
Fed Governor Christopher Waller, speaking at the Istanbul Economic Forum, indicated that additional rate hikes could be necessary to bring inflation down more quickly if economic data remained broadly in line with expectations.
St. Louis Fed President Alberto Musalem also said monetary policy would need to be tightened further to return inflation to target.
Meanwhile, selling pressure in US Treasury markets eased somewhat after the Treasury accepted $6 billion in a buyback operation involving long-term bonds.
The yield on the benchmark 10-year Treasury note fell about five basis points Thursday to 5.24% and stood at 5.22% Friday.
The US Dollar Index declined 0.1% Thursday to 102.1 and slipped another 0.1% Friday to 102.
Gold rose 1.2% to $4,184 per ounce, supported by lower bond yields and a weaker dollar.
On Wall Street, the S&P 500 fell 0.47% Thursday and the Nasdaq Composite lost 1.25%, while the Dow Jones Industrial Average gained 0.1%.
US stock indexes opened higher Friday.
European markets pressured by bond yields, energy costs
European equity markets faced selling pressure Thursday amid rising energy prices and weakness in regional bond markets.
Bank of England Governor Andrew Bailey said the global financial system had remained resilient despite growing uncertainty but warned against complacency.
Speaking at the Istanbul Economic Forum, Bailey said policymakers should prepare for larger financial shocks rather than treat them as exceptional events.
He also warned that expanding AI-related investment could expose the economy to new risks, while the technology's potential contributions to economic growth were only beginning to emerge.
In Germany, exports fell 0.8% month on month in August, missing expectations, while imports increased 0.9%.
The country's trade surplus narrowed to €19.5 billion ($21.9 billion), with exports to the US declining 6.3% from the previous month.
The German government raised its economic growth forecast for this year to 1.3% from 0.5%.
On Thursday, Britain's FTSE 100 fell 0.16%, Italy's FTSE MIB declined 1.35%, Germany's DAX lost 1.18% and France's CAC 40 dropped 0.51%.
European stock indexes opened higher Friday.
Asian markets mostly decline
Asian equity markets were mostly lower Friday as rising energy costs and concerns over AI profitability dampened risk appetite.
Gold mining stocks, however, advanced, with Hong Kong-listed Zijin Gold International gaining 5% and Zhaojin Mining rising 3.45%.
In China, Chifeng Gold climbed 3.01%, while Shandong Gold gained 3%.
In Japan, data released Friday showed household spending fell 3.1% year on year in August.
Near the close of trading, Japan's Nikkei 225 was down 0.1% and China's Shanghai Composite fell 0.6%, while Hong Kong's Hang Seng rose 1.2%.
South Korean financial markets were closed for a holiday.
