Stocks fall as tech gloom combines with election jitters – ThePrint – ReutersFeed

Amanda Cooper
LONDON (Reuters) – Global shares fell on Thursday after Facebook owner Meta Platforms and Microsoft warned of rising artificial intelligence costs, while data on strong U.S. economic growth helped support the dollar.

Warnings from major technology companies have raised fears among investors that the payback on big spending on AI may take longer than many had hoped. And with Amazon and Apple reporting later in the day, sentiment was cautious.

Investors were also cautious ahead of US non-farm payrolls data on Friday, the presidential election next Tuesday and a Federal Reserve policy decision on Thursday.

Data on Thursday showed the Fed’s preferred measure of inflation, the core personal consumer expenditures (PCE) index, rose 2.7% in September, compared with expectations for a 2.6% increase, consistent with a rise in August.

A separate report showed that initial weekly jobless claims fell more than expected over the past week, indicating the health of the labor market.

S&P 500 futures fell 0.7% on the day, as did Nasdaq futures, pointing to a weaker start to trading on Wall Street.

“For financial markets, these numbers are unlikely to be a game-changer as participants are now fully focused on next Tuesday’s presidential election, even if the woes of the October jobs report loom on tomorrow’s data list,” said Pepperstone strategist Michael Brown.

At the company level, shares of Microsoft and Meta, which are up 15% and 67% respectively this year, fell 1% to 2% in premarket trading.

“There are so many excuses for not increasing your market presence right now, and tech earnings put the cherry on top,” said Trade Nation market strategist David Morrison.

Nvidia is the last of the Magnificent Seven mega-cap tech companies to report earnings in about three weeks. Tesla announced the news last week and Alphabet on Tuesday.

Fragile nerves

In Europe, the STOXX 600 index hit its lowest level in seven weeks on a tough day for earnings as falls in shares of French lender BNP Paribas after the results, as well as technology shares such as ASML and SAP, offset a rebound in the energy sector and the broader banking sector .

Meanwhile, in the final stages of the US presidential election, polls continue to put Republican Donald Trump and Democrat Kamala Harris neck and neck, although financial markets and some betting platforms are leaning toward a Trump victory.

The dollar index fell 0.17% to about 104, just below Tuesday’s nearly three-month high. The US currency fell the most against the yen, down 0.5% at 152.695, still within this week’s high of 153.885.

The dollar will rise nearly 6.5% against the yen in October on political uncertainty in Japan after the coalition government lost its majority in parliamentary elections over the weekend, potentially complicating the Bank of Japan’s efforts to normalize monetary policy.

“This confirms our forecast that the Bank of Japan will raise rates earlier than current market expectations, although we have moved up the timing of our forecast for the next rate hike from December to January in light of recent political instability in Japan,” MUFG currency strategist Lee Hardman said .

“One eventual rate hike this year cannot be completely ruled out if the yen weakens sharply after the US election,” he said.

Gold hit another record high of $2,790.15 an ounce before returning to $2,775, while oil rose 0.8% to $73.16 a barrel after weekly data showed an unexpected drop in fuel inventories, giving some certainty about energy demand.

(Additional reporting by Kevin Buckland in Tokyo and Wayne Cole in Sydney; Editing by Toby Chopra, Kirsten Donovan)

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