World stocks dipped on Tuesday as renewed AI concerns hit chipmakers and pushed investors toward government bonds. European stocks bucked the trend. Big Wall Street banks opened the US quarterly reporting season.
World stocks dipped on Tuesday as renewed AI concerns hit high-flying chipmakers and drove investors to the safety of government bonds. The MSCI's main world stocks index dipped 0.13%, with tech-heavy markets in Asia and the United States feeling the brunt of the selloff.
Chip stocks slide on competition fears
Reports of progress by Chinese memory chip maker CXMT fuelled concerns about increased competition from China's AI players. Broadcom CEO Hock Tan also likened some of the flows into the broader AI sector to casino gambling.
US Nasdaq futures fell 0.7%, with Micron Technology down 3.8% in premarket trading and Nvidia dropping 0.8%. South Korea's KOSPI sank more than 5%, its sharpest one-day drop since mid-August.
Julien Lafargue, chief market strategist at Barclays Private Bank, said: "the chip industry, especially on the memory side, is ultimately a cyclical industry".
Europe holds up, Treasury yields ease
European stocks bucked the trend, helped by limited exposure to the tech sector and a drop in oil prices. The pan-European STOXX 600 rose 0.4% to a one-week high.
Meanwhile, the benchmark 10-year yield dipped to 5.187%, inching away from the 24-year high of 5.364% it hit last week. Charu Chanana, chief investment strategist at Saxo Bank, said investors were moving back into Treasuries but saw it as a tactical rally.
Traders now await US inflation data on Wednesday for clues on the Federal Reserve's policy path. They are pricing in an 80.6% chance that it holds rates steady later this month, up from 51% a month earlier, the CME FedWatch tool showed.
Banks report first
Investors focused on US bank earnings to gauge how the recent surge in Treasury yields affects dealmaking, lending growth and funding costs. JPMorgan Chase inched up 1% in early trading after reporting a third-quarter profit increase driven by investment banking and trading. Wells Fargo dropped 0.8%, while Goldman Sachs climbed 3% after their results.
Source: Investing.com
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