London (AFP) – Stock markets struggled Friday following a mixed week dominated by the Gaza ceasefire, US government shutdown, and fears that the artificial intelligence sector is overvalued. After some equity indices hit record highs, along with gold and bitcoin, “the bull run is on pause,” noted Derren Nathan, head of equity research at Hargreaves Lansdown.
European and Asian stock markets were largely downbeat Friday after losses Thursday on Wall Street. The dollar traded mixed against main rivals and oil prices slid more than one percent. Nathan added that “the great reality check, otherwise known as third-quarter earnings season, is upon us.” Buying sentiment won a boost this week from news that ChatGPT-maker OpenAI had signed multi-billion-dollar chip deals with South Korean titans Samsung and SK hynix, as well as US firm AMD.
The spending added to the hundreds of billions already pumped into the sector as firms look to get ahead in the sphere of artificial intelligence. That, in turn, has seen investors flood into the tech sector, sending stock prices rocketing — with US chip leader Nvidia topping a $4 trillion market capitalisation. However, there are rumblings that the rally could run out of steam, causing jitters on trading floors. “Some areas of the market appear overheated,” said Keith Lerner at Truist Advisory Services. Such worries have been part of the reason behind the rally in gold to a record above $4,000 an ounce Wednesday.
Alexandra Symeonidi, corporate credit analyst at William Blair, wrote: “Given the strong rally in tech stocks, some market participants started to question the sustainability of the price momentum and were driving parallels with recent bubbles.” So, while the overall market has been healthy, investors have been adding hedges in what is broadly considered to be a safe haven asset. Still, Pepperstone’s Michael Brown remained upbeat on equities and saw plenty of upside. “My view remains that dips in the equity complex should still be viewed as buying opportunities, with the ‘path of least resistance’ continuing to lead higher amid resilient underlying economic growth, robust earnings growth, and a looser Fed policy backdrop,” he wrote in a commentary.
– Key figures at around 1045 GMT –
London – FTSE 100: DOWN 0.1 percent at 9,500.38 points
Paris – CAC 40: UP 0.1 percent at 8,045.47
Frankfurt – DAX: DOWN 0.2 percent at 24,571.46
Tokyo – Nikkei 225: DOWN 1.0 percent at 48,088.80 (close)
Hong Kong – Hang Seng Index: DOWN 1.7 percent at 26,290.32 (close)
Shanghai – Composite: DOWN 0.9 percent at 3,897.03 (close)
New York – Dow: DOWN 0.5 percent at 46,358.42 (close)
Euro/dollar: UP at $1.1575 from $1.1558 on Thursday
Pound/dollar: DOWN at $1.3280 from $1.3294
Dollar/yen: DOWN at 152.71 yen from 153.14 yen
Euro/pound: UP at 87.17 pence from 86.94 pence
Brent North Sea Crude: DOWN 1.2 percent at $64.41 per barrel
West Texas Intermediate: DOWN 1.2 percent at $60.76 per barrel
© 2024 AFP
