What moved
- US (closed Wednesday): The S&P 500 ended 1.31% higher at 7,619.38, the Nasdaq Composite rose 1.6% to 25,466.19 and the Dow added 0.49% to 52,486.49. With US cash markets shut, futures are the only live read on today, and they point the other way: S&P 500 futures are 0.47% lower and Nasdaq 100 futures 0.94% lower.
- Europe (closed Wednesday): The DAX gained 1.2% to 26,662.77, within 0.1% of its 52-week high. The FTSE 100 rose 0.78% to 10,835.47, the Euro Stoxx 50 added 1.04% and the CAC 40 0.66%.
- Asia (Thursday): Taiwan's index closed 2.63% lower at 43,091.87, the Nikkei 225 ended 0.7% down at 60,819.36 and the Kospi lost 0.61%. The Hang Seng is trading 1.28% lower at 24,003.6 and the Shanghai Composite is down 0.67%.
Why
Wednesday's rally and this morning's slide both come from the AI trade. CoreWeave, which rents out AI computing capacity, jumped 24.71% after saying it expects to turn an adjusted profit in the first half of 2028. That eased fears that the debt-funded data-centre build-out will not pay for itself. Chip stocks rallied on both sides of the Atlantic. In Frankfurt, Siemens Energy rose 10.78% after raising its margin targets and promising to more than triple its dividend, and the STOXX 600 finished at what Reuters called a record close.
After the US close, the Wall Street Journal reported that Nvidia's board is preparing to remove chief executive Jensen Huang. Huang has admitted an affair with a businesswoman whom US intelligence links to China, and the company opened an investigation into his conduct on 8 November. Nvidia shares fell sharply in after-hours trading, and no board decision has been announced. Nvidia is the main barometer of AI spending and a huge customer of Asia's chip supply chain, which is why Taiwan took the heaviest losses.
Behind all this sits a rates problem. Tuesday's hotter-than-expected US inflation figures left markets treating a Federal Reserve rate rise next month as close to certain. The US Treasury market was shut on Wednesday for Veterans Day, so the 10-year yield still stands at 4.998%. A yield near 5% matters for growth stocks because higher rates reduce what investors will pay today for profits expected years ahead. In Europe, defence shares fell after the Czech arms maker CSG cut its margin forecast, sending its own shares down 21.58%.
Sentiment & risk appetite
Risk appetite improved on Wednesday, but the gains were concentrated in tech. The VIX fell 10.12% to 17.49. PrimerIQ's US breadth count showed 3,406 rising stocks against 2,493 falling, a ratio of 1.37. Our sector medians, though, ranged from 2.12% for technology to -0.47% for real estate, with consumer cyclicals also negative. The safe-haven trades are not signalling fear: gold is 0.77% lower at $3,969.60. The dollar is firm, with its index at 103.004, within 0.1% of its 52-week high. The euro is 0.81% lower at $1.1079, sterling is down 0.66% at $1.3261, and the dollar has risen 0.77% against the yen to 159.92. Bond-market nerves are the open question: the MOVE index of Treasury volatility last stood at 92.43 after jumping 7.5% on Tuesday's inflation data.
Economic calendar
The ONS first estimate, published at 07:00 this morning, showed UK GDP up 0.7% in July to September. That matched consensus and was faster than the 0.5% recorded in the second quarter. The economy was 1.9% larger than a year earlier. September alone grew 0.2% against a forecast of zero, so the quarter ended stronger than expected. The Bank of England said last week that about a fifth of growth is coming from AI-related investment.
The US calendar starts at 13:30 GMT with weekly jobless claims, forecast at 195,000 against 189,000 previously. Fed speakers follow: Hammack at 14:00 GMT, Barr at 15:00 GMT (alongside October existing home sales), Goolsbee at 16:30 GMT, Daly at 18:10 GMT and Williams at 23:30 GMT. A 30-year Treasury auction takes place at 18:00 GMT. US producer prices are due on Friday at 13:30 GMT.
Earnings
Allianz set the tone for Europe's results this morning. Third-quarter operating profit came in at €4.71bn against the €4.30bn analysts expected. Asset management made up for catastrophe losses in property and casualty insurance, and the group raised the top of its full-year target to about €18.6bn. The shares have not traded since the results.