Global stocks edge lower as AI and rate fears hit tech
Global equity markets edged lower on Thursday as concerns about artificial intelligence (AI) spending and higher interest rates fuelled a continued sell-off in technology and chip stocks. Investors have been unnerved by valuations of companies in the AI sector as more voices question the sustainability of demand for data centres. On Wall Street, the tech-heavy Nasdaq was down and the Philadelphia SE Semiconductor index was down 2 per cent. The benchmark S&P 500 reversed losses in early trade and was trading higher led by healthcare and materials stocks while the Dow was up 1 per cent. Dublin Kenmare Resources , the Dublin-listed titanium minerals miner, saw its shares rise 3.7 per cent despite downgrading its production forecasts for the year. The company is the subject of a potential bid by a company controlled by the Abu Dhabi royal family. Ryanair enjoyed a 1.5 per cent bounce in its shares – they closed at €22.43 – as oil prices slipped. The rise came even though the EU’s top court ruled regulators must take the limit of 32 million passengers at Dublin Airport into account when allocating take-off and landing slots to airlines there. Airlines, including Ryanair, had challenged the Irish Aviation Authority’s decision to take the cap into account when allocating slots for winter 2024 at the airport, prompting the High Court to refer the matter to the Court of Justice of the European Union. Bank of Ireland and AIB were down 1.2 per cent and 0.8 per cent respectively amid speculation that central banks globally will raise interest rates again before Christmas, a move that might dampen borrowing. Europe In European equity markets, the CAC 40 in Paris ended up 0.8 per cent, while the DAX 40 in Frankfurt added 0.3 per cent. In Frankfurt, semiconductor firm Infineon lost 4.8 per cent. Siemens Energy, which provides power solutions to data centres, shed 2.6 per cent, both well above earlier lows. A brutal tech-led sell-off had hit stocks in Asia. South Korea’s KOSPI index, whose flock of top chipmakers made it one of the main beneficiaries of AI euphoria, plunged almost 8 per cent, while the Nikkei 225 fell nearly 5 per cent. “I think the sell-off reflects investor caution towards the more vulnerable segment of the AI ecosystem, with tech chiefs advocating a slower pace of frontier model development,” Rong Ren Goh, portfolio manager at Eastspring Investments, said. “Markets increasingly question the sustainability and trajectory of demand for computing capacity. These concerns are compounded by higher funding costs, which raises the investment hurdle rates of capital-intensive AI infrastructure projects.” London The FTSE 100 outperformed global peers on Thursday, encouraged by domestic economic data and lower bond yields, benefiting from a lower exposure to technology stocks, which continued to be volatile. It ended up 115.49 points, 1.1 per cent, at 10,840. London’s gains came as investors shifted away from technology stocks amid fears about the future of capital expenditure, Chinese competition and expected returns from AI. Credit checker Experian led the FTSE-100 risers, up 5.9 per cent, with telecoms firm BT up 4.3 per cent and accountancy software provider Sage up 5.6 per cent. JD Sports Fashion climbed 4.3 per cent as it hosted analysts in Orlando. Although there were no updates to financial guidance or targets, management focused the discussion on how they plan to drive growth and profitability in the US sporting goods market. Computacenter, a beneficiary of strong data-centre spending, led the fallers, down 5.6 per cent. Technology-focused trusts Polar Capital Technology and Scottish Mortgage Investment Trust declined 4.7 per cent and 1.2 per cent respectively. Antofagasta fell 4.1 per cent as it reported lower third-quarter output and 2027 guidance than hoped. The London-based miner focused on Chile sees copper production in 2027 between 630,000 and 690,000 tonnes compared to company-compiled consensus of 692,000 tonnes. New York CoreWeave, a heavily indebted data-centre operator in the eye of the recent AI storm, fell another 1.8 per cent following a 15 per cent drop on Wednesday. The Dow Jones Industrial Average rose 1.07 per cent, the S&P 500 rose 0.16 per cent, and the Nasdaq Composite fell 0.23 per cent. – Additional reporting by Reuters