Global Markets Fall as Oracle Selloff Drags Tech Stocks
By Dow Jones Newswires StaffA slump in Oracle's shares aftermarket returned investors' focus to the sustainability of the artificial-intelligence led boom, dragging down markets in Asia and Europe Thursday. U.S. stock markets had advanced at the end of Wednesday's session after the Federal Reserve cut interest rates by a quarter percentage point and investors took a dovish reading of Fed Chair Jerome Powell's comments about potential weakness in the labor market, even after three Fed officials voted against a cut.Oracle's revenue and operating income were shy of analysts' expectations, while it said it would increase capital spending on data centers to the tune of $15 billion. Shares dropped over 11.0% afterhours at one point. Tech infrastructure supplier Broadcom reports later Thursday.U.S. stock futures pointed to a lower open; Nasdaq futures were down the most, off over 1.0%, while futures for the S&P 500 were down 0.9% and futures for the Dow Jones Industrial Average declined 0.5%. Changes in futures do not necessarily predict movements after the opening bell.European indexes open lower as the selloff in Oracle shares fed into European tech stocks, albeit more modestly. The Dutch AEX fell 0.5%, Germany's DAX dropped 0.4% with software company SAP down 2.9%. The Stoxx Europe 600 Technology sector index was recently off 0.8%. The pan-European Stoxx 600 main index fell 0.2%. The Italian FTSE MIB dropped 0.3%, despite gains for luxury retailers Brunello Cucinelli and Moncler. The U.K. FTSE 100 started down 0.1%.Asian markets closed mostly lower. Japan's Nikkei edged down 0.1%, dragged by a 7.7% fall in Softbank's shares. South Korea's Kospi ended down 0.6%, with tech investment house SK Square off 5.1%. Chip maker SK Hynix fell after the Korea Exchange issued a warning that the stock price had gone too high. SK Hynix is a key supplier of high-bandwidth-memory products to Nvidia. China's Shanghai Composite Index fell 0.7% while Shenzhen and the tech-heavy ChiNext each ended 1.4% lower.The U.S. dollar remained under pressure after hitting a seven-week low overnight after the Fed rate cut. Powell's statement seemed to suggest the risks of higher inflation are less dramatic than the risks of a weaker labor market, Commerzbank's Michael Pfister said in a note. "This could pave the way for further interest-rate cuts in the coming year, following a pause in January." The DXY dollar index against a basket of major currencies fell 0.1% to 98.667 after reaching a low of 98.537 overnight.Bitcoin was down early in European business hours amid the general risk-off mood. It was recently down 2.3% to $90,222, according to LSEG data.U.S. Treasury yields declined in the wake of the much anticipated rate cut. "Markets will now quickly turn to next week's delayed payrolls release--pushed back due to the U.S. government shutdown--which stands as the next major catalyst for markets," ADSS's Neal Keane said in a note. Heading into the year-end, risks remain two-way, while AI-linked valuations remain a major concern for investors and continue to shape broader market sentiment, the head of global sales at the U.A.E.-based trading platform said. The 10-year Treasury yield was down 3.9 basis points at 4.124%. Yields of eurozone and U.K. government bonds also declined in early trade, following the direction of U.S. yields.Japanese government bonds extended price gains into afternoon Tokyo trading, after solid demand for 20-year sovereign securities at the Japanese Finance Ministry's latest auction; the 10-year yield dropped 3 basis points to 1.925%.In commodities, gold prices were up; futures in New York rose 0.4% to $4,241.90 a troy ounce, while spot gold gained 0.5% to $4.338.77 an ounce. Silver futures climbed 2.2% to $62.39 an ounce after hitting a record high of $63.25 earlier. "Both gold and silver are heading for their strongest annual performance since 1979, with gold up more than 60% and silver more than doubling, driven by heavy central bank demand, rising ETF inflows, and investor shifts away from sovereign bonds and currencies," MUFG's Soojin Kim said.Brent crude and WTI were both down 1.2% to $61.46 a barrel and $57.73 a barrel, respectively, after settling higher in the previous session when the U.S. seized an oil tanker off the coast of Venezuela. Monthly reports from the International Energy Agency and from OPEC are due Thursday.Write to Barcelona editors at [email protected]