Global equity markets faced broad declines on Thursday as investors reevaluated the frenetic pace of artificial intelligence-driven gains that have characterized this year’s bull market. European equity futures and Asian stocks fell, with the Euro Stoxx 50 contracts dropping 0.6% and the MSCI Asia Pacific Index marking its steepest decline in over three months. Japan’s Nikkei 225 and South Korea’s benchmark indices also retreated, impacted by concerns despite positive earnings from chipmaker SK Hynix Inc.
US stock index futures, however, showed resilience after a 2.3% drop in the S&P 500, indicating a mixed sentiment among global investors.
Homin Lee, senior macro strategist at Lombard Odier Singapore Ltd., noted a widespread reassessment among investors regarding the costs and benefits of the artificial intelligence ecosystem. Lingering worries about softening US consumer demand added to the cautious mood. Lee emphasized that while these concerns might be temporary, such a reassessment following a rapid market rally is natural.
Investor attention also focused on upcoming US economic data releases, including GDP and initial jobless claims, expected later Thursday, for further insights into the health of the economy.
In currency markets, the yen strengthened by as much as 1.1% against the dollar, trading at its highest levels since May. This rally reflects market anticipation ahead of the Bank of Japan meeting next week, where expectations for a potential policy rate hike are mounting.
Wei Liang Chang, macro strategist at DBS Bank Ltd., highlighted the growing unease among yen bears, contrasting the possible BOJ tightening with anticipated rate cuts by the Federal Reserve and the European Central Bank.
Former New York Fed President William Dudley’s call for lower borrowing costs added to market jitters, underscoring concerns that such measures could signal a preemptive move to avert a recession.
In Asia, the People’s Bank of China reduced its medium-term lending facility rate, while Hong Kong and mainland Chinese stocks declined amid efforts to stimulate economic activity.
Elsewhere, disruptions from Typhoon Gaemi led to the suspension of currency trading in the Philippines for a second day, with Taiwan’s market also closed.
Looking ahead, key events include Germany’s IFO business climate report and a series of US economic indicators, including GDP, initial jobless claims, and consumer sentiment data.
Key Market Movements:
Stocks: S&P 500 futures rose 0.2%; Nikkei 225 futures fell 3%; Euro Stoxx 50 futures declined 0.6%
Currencies: Yen rose 0.7% against the dollar; Euro and other major currencies remained stable
Commodities: Oil prices fell amid concerns over China’s economic outlook; Gold extended losses; Digital assets like Bitcoin and Ether also experienced declines
Bonds: US Treasury yields declined; Japanese and Australian yields also saw modest drops
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