Equities: AI concerns pressure stocks as futures rise – Deutsche Bank
Deutsche Bank strategists report that the S&P 500 fell for a second day, dragged by the Magnificent 7 and chip stocks after an FT story suggested OpenAI’s annualised revenue is nearer $50bn than $70bn. However, market breadth was more positive and US equity futures point to a recovery as Oil prices retreat, with Asian indices showing mixed performance.
Tech-led selloff with tentative recovery
"In the US, the S&P 500 (-0.47%) also posted a second consecutive decline, with the Magnificent 7 (-0.95%) dragging the index lower. In fairness, market breadth was more positive, as two thirds of the S&P 500’s constituents were higher on the day. But chip stocks were the big underperformer, with the Philly semiconductor index (-3.39%) posting its worst day in over 3 weeks after the FT reported that OpenAI’s annualised revenue is about $50bn, below recent reports that put this closer to $70bn."
"Otherwise, it was a rough day for equities, as higher oil prices and the risk-off tone saw declines on both sides of the Atlantic. That was particularly clear in Europe, where the STOXX 600 (-0.75%) fell to its lowest since June, whilst France’s CAC 40 (-0.51%) fell to its lowest since March. Meanwhile, European banks continued to struggle, even as spreads were broadly steady, with the STOXX Banks index (-2.26%) also at its lowest since June."
"Overnight in Asia, we’ve seen a mixed performance given those questions on the AI-driven rally. Several indices have lost ground, including the Nikkei (-0.32%), the Shanghai Comp (-1.21%) and the CSI 300 (-1.27%). But there has been more positivity elsewhere, with gains for the Hang Seng (+1.09%) and Australia’s S&P/ASX 200 (+0.56%)."
"And looking forward to today, both US and European equity futures are pointing to a decent recovery, with those on the S&P 500 (+0.30%) and the DAX (+0.78%) rising as oil prices have continued to fall. Otherwise, markets in South Korea are closed for a holiday."
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