What moved
- US (closed Friday): the S&P 500 ended 1.82% lower at 7,580.07, the Nasdaq Composite fell 2.86% to 25,437.00 and the Dow lost 1.09% to 51,770.31. Futures are the only live read on the US this morning. S&P 500 futures are trading 0.41% higher and Nasdaq 100 futures 0.79% higher.
- Europe (closed Friday): the FTSE 100 edged up 0.07% to 10,729.78. The DAX fell 0.85% and the Euro Stoxx 50 1.22%, while the CAC 40 finished flat.
- Asia (today): the Kospi closed 2.24% higher at 5,859.08. The Nikkei slipped 0.33% and Taiwan lost 0.65%. In mainland and Hong Kong trading the Shanghai Composite is up 1.08% and the Hang Seng 0.46%.
Why
Friday's sell-off came from one theme: whether this year's huge spending on artificial intelligence will pay off. Intel beat quarterly expectations but issued disappointing fourth-quarter guidance. It blamed weaker PC demand, manufacturing constraints and the continuing cost of its turnaround, and the shares lost 28.6%. Amazon's weak results added to the worry, and the selling spread across chips and hardware. AMD fell 10.9% and Nvidia 4.2%, while the US Technology sector ETF dropped 4.89%. Reddit and Roblox fell too, so the damage went beyond semiconductors.
The overnight session didn't follow that lead, though. The Kospi opened lower and then rallied. Korean semiconductor exports for October came in very strong, and the government announced more investment in chips and AI data centres. Together those cut against the idea that AI demand is fading. Japan did worse: Kioxia's weak guidance dragged on Tokyo's chipmakers. London's resilience on Friday came from the makeup of the index. The FTSE 100 holds few technology stocks and many defensive ones, and drinks, consumer-goods and telecoms names rose while banks and miners fell.
Oil is the second story. Iranian and Qatari officials have held a third day of talks on ending the war, and OPEC+ left its December output targets unchanged on Sunday. Brent is trading at $110.03 and WTI is down 3.41% at $100.57. Lower energy prices ease the inflation worry, but traders are wary that the conflict could escalate again after Tuesday's US midterms.
Sentiment & risk appetite
Friday's tape was clearly risk-off but not a panic. The VIX closed at 19.42, up 12.91%, and the MOVE index of bond volatility rose 7.12% to 100.20. The sell-off was broad: across PrimerIQ's US universe, decliners outnumbered advancers 4,302 to 1,735. Investors moved into defensive sectors rather than out of the market altogether. Our US technology median fell 3.26% while consumer defensives rose 1.19%, and among the sector ETFs energy (up 1.91%) and staples (up 1.41%) led. Treasuries rallied, taking the 10-year yield down 6bp to 4.929%. Gold is up 0.44% at $3,916.10, although it is still 29.9% below its 52-week high, so this is a mild move into safe assets, not a flight from risk.
Economic calendar
No major UK data came out at 07:00. The day's first test is the final October UK manufacturing PMI at 09:30 GMT. The flash reading was 52.8, well ahead of the 51.7 forecast. In the US, the ISM manufacturing index and September construction spending are due at 15:00 GMT. Chicago Fed President Austan Goolsbee speaks at 16:15 GMT. The Fed's Senior Loan Officer Survey follows at 19:00 GMT and the Treasury's borrowing estimates at 20:00 GMT. These are the first part of this week's quarterly refunding, which matters for long-dated yields.
Earnings
Ryanair's first-half profit fell 15% to €2.15bn, with fuel the main reason. Revenue rose only 3% because average fares fell, and the airline gave no full-year profit guidance, saying it has no visibility of the fourth quarter. The shares react when trading opens. The main US results today come after the closing bell.