Global stocks retreated on Thursday, as tech earnings' optimism provided only fleeting support and was offset by nagging concern over the outlook for AI, while stalemate in the Gulf pushed up oil prices.
MSCI's All-World index, opens new tab was set for its largest daily fall in two weeks, down 0.4%, as tech shares from Seoul and Tokyo to Amsterdam and Paris tumbled.
Meta, the first of the so-called AI hyperscalers to publish quarterly results, reported third-quarter revenue late on Wednesday that beat expectations. But any optimism was short-lived, after the company unveiled a plan to issue non-voting stock that revived concern over its mounting capital commitments.
"There are lots of cross currents in markets at the moment, which are grappling for a narrative right now," Ben Laidler, head of macro and equity strategy at Bradesco BBI, said.
"The big concern is that AI-driven earnings narrative, which has supported US earnings and spread to global equities, may be challenged here."
Meta also suffered a legal blow overnight, after a judge ordered the company to pay a $25 billion penalty to the state in a data privacy case.
In Europe, the STOXX 600 fell 1%, weighed down by tech-related stocks such as ASML, Schneider Electric and Siemens Energy. US stock futures, fell between 1% and 2%, suggesting a drop at the open bell later.
Shares in Meta fell around 0.8% and those in Tesla, which also reported earnings and cut its spending forecast ahead of a possible merger with SpaceX, dropped nearly 5% in the premarket.
Geopolitical concerns played out in oil markets, where Brent crude rose 3% to $112 a barrel, near a five-month high, after more Houthi attacks in Saudi Arabia raised the risk of wider conflict and supply disruptions in the Middle East.
There was enough nervousness about the possible damage to the global economy to offset concern about a sustained pickup in inflation to drive flows into government bonds, which pushed US Treasury yields down by the most in a week. The 10-year note was last 7 basis points lower at 5.075%, trading below that of France for the first time in 13 years.
French government bonds have been battered this month, driving yields above 5% for the first time since 2002, as investors looked for signs the government can contain social unrest and bring spending under control.
The euro, which has been dragged 0.8% lower this month, was steady on Thursday, trading around $1.1241, leaving the dollar index, which tracks the US currency against a basket of six others, down 0.1%.
The yen drew safe-haven demand, leaving the dollar down 0.7% on the day at 157.1, after Deputy Bank of Japan Governor Ryozo Himino to raise borrowing costs. The Korean won was muted at 1324, after the Bank of Korea left its benchmark interest rate unchanged at 3.00% on Thursday.
Gold missed out on safe-haven flows, dropping 1.2% to $4,090 an ounce, while in cryptocurrencies, bitcoin and ether both lost 3% to trade at $82,000 and $2,412, respectively.