LONDON: Global stocks retreated on Thursday as optimism over technology earnings proved short-lived, overshadowed by concerns about the outlook for artificial intelligence (AI), while tensions in the Gulf pushed oil prices higher.
MSCI's All-World Index was on course for its largest daily fall in two weeks, down 0.4 per cent, as technology shares from Seoul and Tokyo to Amsterdam and Paris declined.
Meta, the first of the major AI technology companies to report quarterly results, posted third-quarter revenue late on Wednesday that exceeded expectations. However, optimism faded after the company unveiled plans to issue non-voting stock, reviving concerns about its growing capital commitments.
"There are lots of cross currents in markets at the moment, which are grappling for a narrative right now," said Ben Laidler, head of macro and equity strategy at Bradesco BBI.
"The big concern is that AI-driven earnings narrative, which has supported US earnings and spread to global equities, may be challenged here."
Meta also suffered a legal setback after a judge in New Mexico ordered the company to pay a $25 billion penalty to the state in a data privacy case.
In Europe, the STOXX 600 fell 1 per cent, weighed down by technology-related stocks including ASML, Schneider Electric and Siemens Energy. US stock futures declined by between 1 and 2 per cent, pointing to losses when Wall Street opened later in the day.
Meta shares fell around 0.8 per cent in pre-market trading, while Tesla shares dropped nearly 5 per cent after the electric vehicle maker reported earnings and cut its spending forecast ahead of a possible merger with SpaceX.
Geopolitical concerns were reflected in oil markets, where Brent crude rose 3 per cent to $112 a barrel, near a five-month high, after further Houthi attacks in Saudi Arabia heightened the risk of wider conflict and supply disruptions in the Middle East.
Fears about the potential damage to the global economy outweighed concerns over a sustained rise in inflation, driving investors towards government bonds and pushing US Treasury yields down by the most in a week.
The yield on the benchmark 10-year US Treasury note fell seven basis points to 5.075 per cent, dropping below its French equivalent for the first time in 13 years.
French government bonds have come under pressure this month, pushing yields above 5 per cent for the first time since 2002, as investors looked for signs that the government could contain social unrest and bring public spending under control.
The euro, which has declined 0.8 per cent this month, was steady on Thursday at around $1.1241. The dollar index, which measures the US currency against a basket of six major currencies, slipped 0.1 per cent.
The Japanese yen attracted safe-haven demand, pushing the dollar down 0.7 per cent to 157.1 yen after Bank of Japan Deputy Governor Ryozo Himino signalled his readiness to raise borrowing costs.
The South Korean won was little changed at 1,324 per dollar after the Bank of Korea left its benchmark interest rate unchanged at 3.00 per cent on Thursday.
Gold failed to attract similar safe-haven demand, falling 1.2 per cent to $4,090 an ounce. Bitcoin and ether each declined 3 per cent, trading at $82,000 and $2,412, respectively./Reuters
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