What moved
- US (closed Wednesday): The S&P 500 ended 0.58% higher at 7,757.17, the Nasdaq Composite rose 1.05% to 26,702.86 and the Dow gained 0.69% to 52,856.09. US cash markets are shut. Futures are the only live read on today's session, and they have turned lower: S&P 500 futures are down 0.80% and Nasdaq 100 futures 1.57%.
- Europe (closed Wednesday): The DAX finished 1.35% higher at 25,645.04, the Euro Stoxx 50 rose 1.40% and the CAC 40 gained 1.06%. The FTSE 100 lagged, closing just 0.19% higher at 10,752.88.
- Asia (today): Asia is where the damage is. The Kospi is trading 3.67% lower and the Hang Seng 2.86% lower, with the Nikkei 225 down 2.19% and Shanghai down 0.78%. Taiwan closed 1.81% lower.
Why
Overnight, investors went back to worrying about AI spending. Meta and Tesla both reported after the US close and both beat forecasts. Meta's revenue rose 26% to $64.6bn and its shares rose in extended trading, while Tesla's shares fell despite the beat. Taken together, the two reports did not settle the question that has hung over the market all month: will the vast sums going into AI infrastructure earn a return? US futures turned lower, and Asia, which holds most of the world's chipmakers, took the hit. In Korea, SK Hynix and Samsung Electronics led the losses. Japanese chip-related names fell too. Hong Kong also suffered from weakness in Chinese internet stocks after Alibaba came under official pressure over quality control. The Bank of Korea held rates at 3% after hikes in July and August, as expected, so it was not the cause.
That reverses Wednesday's mood. Stocks rose then because AI demand looked solid: SpaceX reported its first profit as a public company and Super Micro Computer jumped 9.55%. In Europe, earnings did the work. EssilorLuxottica rose 15.48% on strong Ray-Ban-led sales, while Carrefour fell 13.80% after cutting its targets because of unrest in France.
Oil is the other force. Brent is up 2.55% at $111.56 after reports that the US and Israel have drawn up plans for fresh strikes on Iran, and that the US is reducing its staff in the Gulf. WTI is down 2.44% at $99.31. Nothing clean explains why the two benchmarks have split.
Sentiment & risk appetite
Wednesday's US rally was narrow. Across PrimerIQ's US universe, 2,964 stocks rose and 2,953 fell, a 1.0 ratio. Technology rose by a median 1.37% while consumer defensives fell by a median 1.02%, so a handful of tech names carried the day. Volatility measures stayed calm: the VIX ended 0.63 points lower at 16.68 and the MOVE index of bond-market volatility fell 5.66%. Safe havens are not signalling panic either. Gold is down 0.77% at $4,117.90 and the dollar index is 0.27% lower. The yen is the exception: USD/JPY has fallen 0.69% to 157.18, which fits a modest flight to safety in Asia. The US 10-year yield rose 2.9bp to 5.146% on Wednesday. Yields that high raise the rate used to value future profits, which hurts long-duration growth stocks most.
Economic calendar
The ONS published nothing market-moving this morning, so the UK macro story is still Wednesday's inflation data. CPI rose to 3.5% in September from 3.1%, above expectations, driven mainly by motor fuel. Core inflation rose to 2.8% and services inflation to 3.7%. Markets now see a Bank of England rate rise on 5 November as near-certain, from a Bank Rate of 3.75%. Overnight, New Zealand's third-quarter inflation came in at 3.7%, a touch below forecasts.
Later today, US weekly jobless claims are due at 13:30 BST (08:30 ET), with 200,000 expected after 199,000 last week. The Conference Board leading index follows at 15:00 BST and the Kansas City Fed survey at 16:00 BST. Fed officials are in their quiet period before next week's meeting, so there will be no central-bank commentary.
Earnings
Barclays reported at 07:00. Third-quarter pre-tax profit rose 12% to £2.3bn, slightly below the £2.4bn analysts expected. Investment-bank income of £3.1bn missed the £3.3bn forecast: equities revenue rose 47%, but fixed income fell 19%. A new £500m buyback is the offset, and the shares are untested until London opens, with the 28 October Budget's possible bank taxes in the background. In the US, Procter & Gamble, Lockheed Martin, Honeywell and Union Pacific are due before the opening bell.