Global Markets Tumble as Tech Stocks Slide and Oil Surges
Translated & summarized from Bizportal by baba
Global stock markets plunged, led by a significant sell-off in technology and chip stocks following disappointing earnings from Meta and Tesla. Oil prices surged to a five-month high amid geopolitical tensions and attacks in Saudi Arabia. European markets mirrored the downturn, with French bond yields rising due to fiscal concerns. Investors are moving away from risky assets, impacting Bitcoin and gold, while U.S. Treasury yields are falling.
The story in 5 lines · by baba
- Global markets tumbled as tech stocks like Meta and Tesla disappointed investors.
- Oil prices surged to a five-month high, exceeding $110 per barrel for Brent crude.
- European markets opened lower, with French bond yields reaching levels not seen since 2011.
- Investors are selling risky assets, including Bitcoin and gold, and buying U.S. Treasury bonds.
- Geopolitical tensions and Houthi attacks in Saudi Arabia contributed to the oil price rise.
Global stock markets experienced significant declines, with U.S. futures pointing to a lower open on Wall Street. Nasdaq 100 futures dropped approximately 1.7%, S&P 500 futures fell about 1%, and Dow Jones futures retreated by roughly 0.7%, translating to a potential 350-point drop. Technology and chip stocks led the downturn, following disappointing earnings reports from Meta and Tesla that failed to invigorate interest in artificial intelligence. Concurrently, oil prices climbed to a five-month high, with Brent crude surpassing $110 per barrel and WTI crude exceeding $98. This surge in oil is attributed to reports of potential renewed U.S. and Israeli strikes on Iran after the midterm elections, and a deadly Houthi attack on a Saudi airport and oil field.
European markets also opened in the red, with the STOXX 600 index down about 1%, erasing the previous day's gains. Major indices like Germany's DAX, France's CAC 40, and Italy's FTSE MIB saw declines of 0.7% to 1%. European bank and technology indices fell sharply, with Infineon, STMicroelectronics, and ASML experiencing 3%-4% drops. Luxury goods maker Hermes saw a more than 7% plunge on weaker-than-expected quarterly revenues, while Nestle rose 1.2% on better-than-anticipated organic growth. Barclays traded near flat after reporting lower-than-expected profits and announcing job cuts.
France's fiscal situation added to European market woes, with the yield on its 10-year government bonds exceeding 5% and widening the spread with German bonds to the highest level since 2011, amid budget impasses and fears of a credit rating downgrade. Investors appeared to be selling off risky assets, including cryptocurrencies like Bitcoin, which lost over 3%, and gold, down 1.5%. This selling pressure is pushing capital into U.S. Treasury bonds, causing their yields to fall.
In corporate news, Meta's stock fell despite exceeding revenue and earnings per share estimates, as investors focused on increased spending projections and a rare negative free cash flow. The company also announced a 2:1 stock split. Tesla's stock declined despite beating profit and revenue expectations, with concerns over its automotive revenue and future investment costs for projects like Optimus and Cybertruck. Chip-related stocks like Lam Research, AMD, Micron, and Nvidia also saw significant drops, with investors worried about a slowdown in AI infrastructure spending.
Conversely, Spotify surged over 5% on strong revenue forecasts and user growth. Lockheed Martin rose on better-than-expected quarterly results and an increased full-year profit and revenue outlook. Palantir Technologies, trading near a record high, was a notable exception, with analysts citing its "sovereign AI" concept and strong analyst ratings, despite concerns about its high valuation. Other companies like CSX, Procter & Gamble, and QuantumScape also saw positive movement, while Las Vegas Sands and Rollins experienced declines.
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