London (AFP) – Wall Street stocks steadied on Wednesday after better-than-expected jobs data soothed concerns about the US economy. However, Asia’s main markets fell sharply, as did Wall Street’s tech-heavy Nasdaq Composite index on Tuesday, on fears about an AI bubble following a rally that has propelled valuations to record highs.
US private sector employment jumped by 42,000 in October, ADP said, rebounding from a loss of 29,000 jobs in September, nearly double the amount forecasted by economists surveyed by Dow Jones Newswires and The Wall Street Journal. The ADP figures are likely to attract renewed attention as they are one of the few economic indicators released in recent weeks and will feed into investors’ perceptions of whether the US Federal Reserve will cut interest rates again in December.
Wall Street’s main indices opened broadly flat. The so-called Magnificent Seven tech stocks remained under pressure, with both Amazon and Apple down around one percent. Briefing.com analyst Patrick O’Hare said real valuation concerns would not be dispelled by a single day of losses, and that it would become clear during Wednesday if investors were still in the “buy-the-dip” philosophy that helped markets reach record highs. He pointed to semiconductor manufacturer AMD, which looks to become a major player in AI chips and which turned in better-than-expected third-quarter results.
“Advanced Micro Devices (AMD) may be the tell on whether that approach will shine yet again or lose some of its luster,” said O’Hare. Shares in AMD fell by 2.7 percent at the start of trading. “If AMD can fight back, chances are other growth stocks will follow,” added O’Hare.
Global stock markets have soared this year as an eye-watering flood of cash piled into companies linked to artificial intelligence, including US titans Nvidia, Amazon, and Apple as well as Asian firms Samsung and Alibaba. But despite recent strong earnings, traders have started questioning the wisdom of chasing ever-higher prices, with cash mostly funneled into a handful of big-name companies.
Sentiment was also hit by the US government shutdown, which on Wednesday became the longest ever, topping the 35-day record set during President Donald Trump’s first term in office. His administration warned of holiday air-travel chaos and threatened Americans’ benefits in a bid to force a resolution. A total of 1.4 million federal workers, from air-traffic controllers to park wardens, are on enforced leave or working without pay.
“As well as valuation fears, the US is grappling with a nation in shutdown,” noted Emma Wall, chief investment strategist at Hargreaves Lansdown. “The US is nearing the peak travel period, with Thanksgiving later this month. Listed airlines are likely to see share prices fall should flights be canceled en masse.”
– Key figures at around 1430 GMT –
New York – Dow: FLAT at 47,078.11 points
New York – S&P 500: FLAT at 6,770.83
New York – Nasdaq Composite: UP less than 0.1 percent at 23,362.57
London – FTSE 100: UP 0.3 percent at 9,748.47
Paris – CAC 40: DOWN 0.1 percent at 8,059.84
Frankfurt – DAX: DOWN 0.2 percent at 23,907.94
Tokyo – Nikkei 225: DOWN 2.5 percent at 50,212.27 (close)
Hong Kong – Hang Seng Index: DOWN 0.1 percent at 25,935.41 (close)
Shanghai – Composite: UP 0.2 percent at 3,969.25 (close)
Euro/dollar: UP at $1.1486 from $1.1479 on Tuesday
Pound/dollar: UP at $1.3027 from $1.3019
Dollar/yen: UP at 153.98 yen from 153.66 yen
Euro/pound: DOWN at 88.16 pence from 88.17 pence
Brent North Sea Crude: DOWN 0.6 percent at $64.08 per barrel
West Texas Intermediate: DOWN 0.7 percent at $60.13 per barrel
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© 2024 AFP
