European shares have fallen for the second straight day as another rise in crude oil prices keeps risk sentiment in check, while investor focus homes in on results from key AI bellwether companies.
The pan-European STOXX 600 dipped 0.6 per cent on Tuesday morning after dropping close to one per cent on Monday, with European semiconductor companies including ASML and ASMI falling more than three per cent.
The euro recouped some losses from the previous day, while yields on French government bonds edged lower after their biggest one-day jump in about a month, as widespread protests underscored difficulties the government faces in reducing its large deficit.
France's cities were calm overnight under curfews imposed after last weekend's scenes of chaos, as protest groups announced a new round of demonstrations next Saturday.
"The weekend's protests have further intensified concerns about French public finances given the size of the austerity measures needed to significantly reduce the budget deficit," said Pia Fromlet, an economist at SEB.
French stocks, however, showed no signs of respite and fell in line with the broader market weakness.
Crude prices resumed their climb, with Brent hitting a five-month high above $US110 a barrel.
Yemen's Iran-aligned Houthis said on Monday they launched several attacks on Saudi energy, airport and military targets.
The dollar index, which measures the greenback against a basket of currencies, fell 0.2 per cent to 101.77. The euro was up 0.2 per cent at $US1.122.
The Japanese yen strengthened 0.2 per cent after an auction of long-dated Japanese government bonds drew record demand.
Meanwhile, media reports said the Bank of Japan might raise its inflation outlook for the next fiscal year in forecasts due in October.
In the US, futures on the tech-heavy Nasdaq slipped 0.3 per cent a day after technology stocks found some footing following last week's sharp sell-off.
The spotlight is on corporate earnings. Investors will be looking for evidence that consumers and the broader economy remain resilient, but chiefly, that the vast amount of capital pouring into the AI build-out is showing signs of paying off.
Reflecting some of this nervousness was a near-30 per cent drop in shares of South Korean AI infrastructure company Elice Group on Tuesday, when the stock fell below its initial public offering price in its market debut.
Quarterly earnings are due from SpaceX and Netflix on Tuesday, with results from AI heavyweights such as Meta and Tesla scheduled for later in the week.
"Investors are fine with AI being used more. What they're questioning is whether every dollar of AI capex earns more than it costs to finance," said Ninghui Liu, head of investment strategy and research for APAC at State Street Investment Management.
With oil prices around five-month highs, gold remained under a touch of pressure, down 0.4 per cent at $US4,122 an ounce.
The Canadian dollar rose against the US dollar, which fell 0.35 per cent to $USC1.406 after residents in Alberta voted to remain part of Canada in the province's first-ever referendum on separation.
Finally, a number of European Central Bank officials, including Martin Kocher and Olli Rehn, speak on Tuesday, as well as Bank of England Monetary Policy Committee member Megan Greene.
Their words might help shape investors' expectations for interest rates in the euro zone and Britain.