London (AFP) – Global stock markets largely retreated Wednesday, with South Korea’s index suffering one of its steepest plunges as investors further unwound bets on the AI boom. But London’s benchmark FTSE 100, which does not feature major technology companies, managed to set a record high as surging oil prices boosted energy majors Shell and BP and thanks to some positive company earnings.
London’s main index hit 10,951.06 points, beating its previous record of 10,934.94 reached at the end of February, before paring gains. The dollar was little changed against main rivals awaiting clues on the outlook for US interest rates alongside Wednesday’s expected decision from the Federal Reserve to freeze borrowing costs despite high inflation concerns. However, the possibility of a rate hike is not completely excluded and those concerns also helped pull Wall Street’s indices lower, as did soaring oil prices.
Investors are also wary ahead of earnings reports from Microsoft and Meta due after the closing bell. “AI jitters are still causing volatility on indices as investors question lofty tech valuations, increased competition and future demand,” noted Susannah Streeter, chief investment strategist at Wealth Club. The tech-heavy Nasdaq Composite shed more than one percent, but semiconductor stocks took a heavier beating, particularly in Asian trading earlier in the day. “It’s been another turbulent ride for South Korea’s Kospi,” she added.
The South Korean index — seen as a bellwether for the AI industry owing to the outsize dominance of tech firms SK hynix and Samsung — slumped six percent to extend Tuesday’s near 11-percent collapse. Chipmaker SK hynix shed almost 20 percent despite announcing huge profits and promising to continue spending. The company has lost more than half its value since hitting a record high just one month ago. Tokyo’s stock market closed down 1.5 percent and Taipei dropped nearly four percent.
“The market is increasingly rewarding companies that expand revenue while maintaining spending discipline, and penalising those whose ambitions have outrun their balance sheets,” said Fabien Yip at IG trading group. Other Asian equity markets managed to close higher, with Hong Kong up two percent as its tech sector — which suffered a painful first half of the year — led the way.
Elsewhere, world oil prices jumped, with international benchmark contract Brent crude up more than seven percent, rebounding in volatile trading after fresh strikes in the Middle East reignited fears of crude supply disruptions. US and Saudi forces struck an Iraqi militant alliance Wednesday, as the Middle East war expands beyond its main focus in Iran to involve the Islamic republic’s proxies. The strikes follow a short lull in direct US attacks on targets in Iran, with Tehran’s allies in Yemen and beyond becoming increasingly drawn in. Iran, meanwhile, launched missiles at Jordan, in its first attack in the region since the pause in fighting with the US began.
The strikes revived fears about global oil supplies, already hit hard by Iran’s blockade of the Strait of Hormuz and more recently by Houthi threats to Saudi exports. Non-tech companies were also in focus amid the release of mixed second-quarter earnings updates. Hermes’ share price tumbled more than 11 percent on the Paris market after its results showed demand in key market China is not reviving. However, shares in Gucci parent Kering soared more than 15 percent on the Paris CAC 40.
– Key figures around 1530 GMT –
New York – DOW: DOWN 1.6 percent at 51,923.88 points
New York – S&P 500: DOWN 0.8 percent at 7,366.18
New York – Nasdaq Composite: DOWN 1.2 percent at 24,590.94
London – FTSE 100: UP 0.3 percent at 10,908.41 (close)
Paris – CAC 40: DOWN 0.6 percent at 8,408.27 (close)
Frankfurt – DAX: FLAT at 25,460.48 (close)
Seoul – Kospi: DOWN 6.0 percent at 5,663.24 (close)
Tokyo – Nikkei 225: DOWN 1.5 percent at 61,434.19 (close)
Hong Kong – Hang Seng Index: UP 2.0 percent at 25,807.92 (close)
Shanghai – Composite: UP 0.4 percent at 3,828.47 (close)
Brent North Sea Crude: UP 7.2 percent at $88.01 per barrel
West Texas Intermediate: UP 7.5 percent at $85.21 per barrel
Euro/dollar: DOWN at $1.1382 from $1.1386 on Tuesday
Pound/dollar: DOWN at $1.3284 from $1.3286
Dollar/yen: DOWN at 163.85 yen from 163.87 yen
Euro/pound: DOWN at 85.67 pence at 85.70 pence
© 2024 AFP
