AI trading has stalled, the situation in the Middle East has worsened, and global stock markets are facing a "Black Thursday"!

Author: Zhang Yaqi
The earnings reports of tech stocks are mixed, combined with the escalating situation in the Middle East, leading to a decline in global market risk sentiment.

Before the U.S. stock market opens, the Nasdaq 100 index futures are down 1.7%, risking a significant erasure of the 2.2% gain accumulated earlier this week. Tesla is down about 5%, with the company's Q3 revenue falling short of expectations and a reduction in capital expenditure targets. Semiconductor stocks are broadly down, with IBM down about 5%, Intel down about 5%, Micron Technology down about 3%, and NVIDIA down about 2%. Optical communication stocks are also broadly down, with MaxLinear down about 5%. Meta is slightly up, with the company's Q3 revenue and Q4 guidance both exceeding expectations, raising the lower limit of AI capital expenditure, and planning to issue non-voting new shares.

The Euro Stoxx 50 index opened down 1.2%, the German DAX index down 0.7%, the UK FTSE 100 index down 0.3%, and the French CAC 40 index down 0.9%. Hermès shares fell 6%, with the company's Q3 sales falling short of expectations. The Korean Composite Stock Price Index saw its decline widen to 4%, with SK Hynix down over 6%, Samsung Electronics down over 4%, the Nikkei 225 index down about 2.4%, and the MSCI Asia-Pacific index down 1.5%, reaching the lowest closing level since the end of July.

According to CCTV News, citing U.S. officials and other informed sources, the U.S. and Israeli military have developed specific plans to launch military strikes against Iran again after the U.S. midterm elections. Brent crude oil rose by 3.0% during the day, priced at $112.09 per barrel. Safe-haven demand has pushed up U.S. Treasury prices, with the yen becoming the G10 currency that has risen the most against the dollar. Spot gold fell 1.50% during the day, currently priced at $4080 per ounce, while spot silver fell below $56 per ounce, down 3.40% during the day.

• Nasdaq futures fell 1.5%, and S&P 500 index futures fell 0.80%. Tesla is down about 5%, with the company's Q3 revenue falling short of expectations and a reduction in capital expenditure targets. Semiconductor stocks are broadly down, with IBM down about 5%, Intel down about 5%, Micron Technology down about 3%, and NVIDIA down about 2%. Optical communication stocks are broadly down, with MaxLinear down about 5%. Meta is slightly up, with the company's Q3 revenue and Q4 guidance both exceeding expectations, raising the lower limit of AI capital expenditure, and planning to issue non-voting new shares.
• The Euro Stoxx 50 index opened down 1.2%, the German DAX index down 0.7%, the UK FTSE 100 index down 0.3%, and the French CAC 40 index down 0.9%. Hermès shares fell 6%, with the company's Q3 sales falling short of expectations.
• The Korean Composite Stock Price Index saw its decline widen to 4%, with SK Hynix down over 6%, Samsung Electronics down over 4%, and the Nikkei 225 index down about 2.4%.
• The dollar fell 0.5% against the yen to 157.34.
• The yield spread on 10-year German and French government bonds widened to 169 basis points, reaching a new high since 2011.
• The yield on 30-year U.S. Treasuries fell 3 basis points to 5.38%, the lowest level since September 23.
• Brent crude oil rose by 3.0% during the day, priced at $112.09 per barrel.
• Spot gold fell 1.50% during the day, currently priced at $4080 per ounce, while spot silver fell below $56 per ounce, down 3.40% during the day.

• Bitcoin fell over 2%, priced at about $82800.

Diverging Earnings Reports, AI Narrative Under Pressure

Before the U.S. stock market opens, Tesla is down about 5%, with the company's Q3 revenue falling short of expectations and a reduction in capital expenditure targets. Semiconductor stocks are broadly down, with IBM down about 5%, Intel down about 5%, Micron Technology down about 3%, and NVIDIA down about 2%. Optical communication stocks are broadly down, with MaxLinear down about 5%. Meta is slightly up, with the company's Q3 revenue and Q4 guidance both exceeding expectations, raising the lower limit of AI capital expenditure, and planning to issue non-voting new shares.

Tim Waterer, Chief Market Analyst at KCM Trade, stated:

"The market is currently very picky about capital expenditure. Companies increasing spending raises concerns, while cutting spending also raises concerns—Tesla is the latest case. In this environment, it is almost impossible to find the right balance."

Kaanhari Singh, Head of Asia-Pacific Equity Derivatives Sales at Barclays, said in an interview with Bloomberg Television:

"The market is basically telling us that AI trading has shifted from speculation and narrative to a phase of substantive performance verification, with significantly higher standards for exceeding performance expectations—whether in forward guidance on capital expenditure or clarity of monetization paths."

The core contradiction that investors are currently worried about is whether the massive investment in data centers and computing infrastructure can be converted into returns in a reasonable time frame, while the significant rise in AI concept stocks this year has put pressure on valuations, and discussions about bubble risks are gradually heating up.

Escalating Middle East Situation Raises Supply Concerns

The direct trigger for rising oil prices comes from the Middle East. Following a deadly attack in Saudi Arabia, market concerns about further escalation in the Middle East and disruptions to crude oil supply have significantly increased. The U.S. State Department subsequently ordered the evacuation of non-emergency diplomatic personnel and their families from Saudi Arabia, citing the growing threat from the Houthi armed group in Yemen.

According to Bloomberg, citing U.S. officials and informed sources, the military of the U.S. and Israel have developed specific plans for a new round of strikes against Iran after the U.S. midterm elections.

Rajeev De Mello, Global Macro Portfolio Manager at Gama Asset Management, stated that investors are "uneasy" about oil prices breaking $110. "Oil prices and energy commodity prices continue to hit new highs, showing clear stagflation characteristics. As the winter in the Northern Hemisphere approaches, the implied volatility of oil price options has risen again, reflecting the market's high uncertainty regarding energy price trends."

Safe-Haven Assets in Demand, U.S. Treasuries and Yen Strengthen

Against the backdrop of declining risk sentiment, U.S. Treasury yields are down across the board, with long-end yields hitting a near one-month low. The yield on 30-year U.S. Treasuries fell 3 basis points to 5.38%, the lowest level since September 23.

The yen performed outstandingly, becoming the G10 currency that has risen the most against the dollar. David Forrester, Senior Strategist at Crédit Agricole in Singapore, stated:

"The decline in S&P 500 futures has provided support for the yen. More importantly, the yen has strengthened against all major currencies, including the dollar, reflecting the yen's status as a safe-haven asset in the face of a stalled AI boom."

Gold, however, failed to benefit from the safe-haven sentiment, with spot gold prices falling about 1.5% during the day, currently priced at $4080 per ounce, breaking below the $4100 mark; spot silver fell deeper, down 3.4% during the day, falling below $56 per ounce. Bitcoin fell over 2%, priced at about $82800. European stock index futures indicate that European stocks are expected to open down about 0.8%.

Bloomberg strategist Mark Cranfield pointed out that before Microsoft and Alphabet announce their earnings reports next week, tech earnings will enter a quiet period, making it difficult for macro investors to form optimistic expectations during this phase. "This means that strong oil prices will once again become the focus of the market, especially after the U.S. State Department ordered the evacuation of diplomatic personnel from Saudi Arabia."

More news will continue to be updated...