AI summary
Summary of article:
The poor financial reports of technology giants dragged down AI concept stocks, and funds simultaneously turned to safe assets such as US Treasury bonds, Japanese yen and Swiss franc, and risk-on appetite increased in global markets.
A new wave of negative financial reports caused two consecutive days of selling pressure on global technology stocks, prompting funds to move out of artificial intelligence (AI) concept stocks and into US Treasury bonds and other safe assets.
Amazon Andintel The disappointing financial report has deepened market skepticism about AI capital spending. After the market closed on the 29th, Amazon’s stock price fell by 7.3%, and Intel’s stock price fell by 23%.Google The share price of parent company Alphabet fell 13%, and its market value dropped by US$500 billion overnight. Tension continued in the Asian session on the 30th. Samsung Electronics’ earnings were not as good as expected and its share price fell 3%.
Anna Wu, founder and investment strategist at Floodlines Research, said: “This earnings season has been very harsh for AI companies. Amid concerns about an AI bubble and inflation, most have been punished. Investors are worried that AI demand has slowed, but financing costs and credit risks have increased, which may ultimately force hyperscalers to slow the pace of data center deployments.”
While the global AI concept stocks are in the midst of a battle, funds are transferred to safe assets to avoid risks.
Prices of US Treasury bonds of all maturities rose on the 30th, while yields, which are inversely related to prices, fell sharply. The U.S. interest rate, considered the benchmark for mortgage, car loan and credit card interest rates. The 10-year Treasury bond yield fell 5 basis points to 4.933%. The decline so far in October has been close to 40 basis points. There has been a definite decline in the monthly line, which is the first time since February.
At the same time, Australian, Japanese and New Zealand government bond prices rose across the board, and 10-year yields fell by about 5 basis points. “Ugly earnings reports from technology companies released this week triggered another wave of risk aversion, sending the bond market sharply higher today,” said Clopton, chief interest rate strategist at National Australia Bank (NAB) in Sydney.
Risk aversion has strengthened in the market, and traders have also turned to other safe assets for shelter. The Swiss franc rose against the US dollar, the biggest rise among G-10 currencies. The Bank of Japan (Central Bank of Japan) kept its policy rates unchanged as expected, but the yen hit a high of 157 yen per US dollar, strengthening for the third consecutive trading day and on track for a gain of 0.2% for the month.
The US dollar index (DXY), which tracks the US dollar against six major currencies, fell 0.2%, but has climbed 0.3% from October and is expected to rise for the second consecutive month. The US dollar is usually a beneficiary when investors look for a safe haven for money, but it declined on Friday after a sharp fall in US bond yields.
The euro also benefited from selling pressure on AI stocks that weighed on the dollar. However, the euro zone’s economic growth still lags that of the United States and lacks support from a boom in AI spending, so the benefits are limited. Barclays forex strategist Famekis believes the euro’s rise may be short-lived. The euro rose 0.12% to US$1.1195 intraday on the 30th.
Summary FAQ
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Disappointing financial reports from Amazon and Intel have hit technology stocks such as Alphabet and Samsung Electronics, making the market increasingly skeptical about AI-related spending and profit prospects, leading to a series of selling pressure.
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The market is not only concerned about the weak demand for AI, but also more concerned about rising financing costs and rising credit risks, which may force hyperscale cloud players to slow down the deployment of data centers and suppress the pace of AI investment.
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Large inflows of money into US government bonds of various maturities pushed down yields, and also boosted the strength of the Swiss franc and yen. The US dollar index fell slightly due to the decline in US bond yields, and the euro also gained in the short term.
