London (AFP) – Tech stocks bounced on Wall Street Friday but failed to fully recover from the previous day’s rout on fears that the victorious Democrats will slam the brakes on the rollout of AI infrastructure. Investors welcomed a partial recovery for the tech-heavy Nasdaq after its plunge on Thursday, which sent Asian and European markets tumbling.
But the Nasdaq technically entered a correction after dropping more than 10 percent over the past month, raising doubts about the eventual payoff from massive AI investments. If tougher US regulation of the AI data centre rollout emerges from the defeat of President Donald Trump’s Republicans this week, market players could turn even more wary. A report showing that the US economy added 165,000 jobs last month, far more than analysts had expected, helped boost confidence in the economy on Friday.
“Bargain hunters are piling back into US stocks, led by technology shares, as a stronger-than-expected jobs report, lower unemployment, and improved consumer sentiment reinforce the resilience of the US economy despite higher energy costs,” said IG analyst Axel Rudolph. The Philadelphia Semiconductors index, which includes the major chip players in the AI industry, rose 4.7 percent.
“The market is hoping to hit a reset button today, yet the path ahead is anything but clear,” said Briefing.com strategist Patrick O’Hare. While the US jobs data — including a dip in the unemployment rate to 4.1 percent — reassured investors on the strength of the economy, it also cleared the way for the US Federal Reserve to raise interest rates. Investors widely expect the Fed to raise interest rates by a quarter percentage point at its next meeting in December to bring down stubborn inflation.
Rising interest rates would further complicate the calculus for tech firms that have propelled markets worldwide over a four-year bull run. “Big worries are colliding — the build-out of data centres looks set to slow, which risks shredding the spending spree underpinning the boom, right at the time that investors have become super nervous about returns on this massive investment,” said Susannah Streeter, chief investment strategist at Wealth Club.
The Tokyo and Seoul stock markets closed out their weeks with losses of six percent following the Nasdaq’s 5.5 percent collapse on Thursday, its worst showing since April last year when Trump unveiled his wide-ranging global tariffs. On Seoul’s Kospi stocks index, chip giant SK hynix slumped 10 percent, and its rival Samsung lost 6.4 percent. The London, Paris, and Frankfurt stock markets finished down, despite featuring few technology firms.
Elsewhere, the dollar firmed following the US jobs data.
– Key figures at around 1630 GMT –
New York – Dow: FLAT at 51,540.58 points
New York – S&P 500: UP 0.9 percent at 7,422.81
New York – Nasdaq: UP 1.7 percent at 24,728.16
London – FTSE 100: DOWN 1.0 percent at 10,673.94 (close)
Paris – CAC 40: DOWN 0.8 percent at 8,137.54 (close)
Frankfurt – DAX: DOWN 1.9 percent at 25,820.36 (close)
Tokyo – Nikkei 225: DOWN 6.0 percent at 57,434.77 (close)
Seoul – Kospi: DOWN 6.0 percent at 5,059.69 (close)
Hong Kong – Hang Seng Index: DOWN 1.3 percent at 24,481.86 (close)
Shanghai – Composite: DOWN 1.1 percent at 3,649.18 (close)
Brent North Sea crude: DOWN 0.8 percent at $97.54 per barrel
West Texas Intermediate: DOWN less than 0.1 percent at $90.45 per barrel
Euro/dollar: DOWN at $1.1148 from $1.1222 on Thursday
Pound/dollar: DOWN at $1.3365 from $1.3454
Dollar/yen: UP at 158.34 yen from 157.83 yen
Euro/pound: UNCHANGED at 83.41 pence
© 2024 AFP
