GLOBAL MARKETS — Financial markets showed tentative signs of stabilization on Friday following a sharp decline in technology stocks earlier in the week. However, surging oil prices and escalating geopolitical risks continued to cloud the outlook for equities, energy costs and monetary policy.
The technology selloff was fueled by concerns over the massive investments needed to sustain the artificial intelligence boom. Investors have increasingly questioned whether technology companies can generate sufficient returns from spending on chips, computing infrastructure and data centers.
Asian markets offered some support to overall sentiment, while European shares edged lower. The recovery remained uncertain as traders assessed the financial risks associated with the AI investment cycle.
In energy markets, Brent crude rose to $114 per barrel, its highest level in five months. The increase followed Houthi attacks in Saudi Arabia and reports that the United States and Israel had developed plans for renewed strikes on Iran after the US midterm elections.
The possibility of further disruptions to Middle Eastern energy supplies has heightened concerns over oil availability and prices. More expensive crude can raise costs across transportation, manufacturing and other energy-intensive industries, while adding to inflationary pressures.
European natural gas prices climbed another 4%, bringing their increase for the month to almost 30%.
Kit Juckes, global head of currency strategy at Societe Generale, described the market environment as nervous, citing rising oil prices and the correction in technology stocks after their substantial gains.
Geopolitical uncertainty and shifting expectations for corporate earnings have made the investment outlook more complicated. While some markets recovered, concerns about higher energy costs and continued volatility persisted.
In the United States, Nasdaq futures declined 0.1%, while S&P 500 futures slipped 0.2%. The moves followed a 2.6% plunge in the Nasdaq on Thursday, its largest daily percentage decline since June.
The Philadelphia SE Semiconductor Index dropped almost 7%. Meta Platforms shares lost nearly 8%, while CoreWeave fell 10% to its lowest level since May 2025. The cost of insuring CoreWeave’s debt also increased.
The losses highlighted investors’ growing scrutiny of businesses tied to the AI investment boom, particularly companies that need substantial funding to expand their computing capacity.
Government bonds, meanwhile, regained favor as investors sought safer assets amid market uncertainty. US Treasury yields fell back below 5% after recording their largest one-day decline since March 2023 on Thursday, reflecting renewed demand for bonds as equities came under pressure.
Expectations for interest rates also shifted. Markets scaled back bets on future rate increases, removing almost a full quarter-point Federal Reserve hike for next year from their pricing. The implied probability of a December Fed hike dropped to 85%.
In Europe, the likelihood of a December European Central Bank rate increase fell to 69%, compared with 90% earlier in the week.
Asian stocks delivered mixed performances. Japan’s Nikkei declined 0.3% on Friday, ending the week down more than 4%. South Korea’s KOSPI recovered after falling as much as 4% earlier in the session.
China’s CSI300 advanced 1.7%, while Hong Kong’s Hang Seng gained 0.7% following Thursday’s 3% decline. The rebounds indicated that some investors were finding opportunities after the recent selloff, although market confidence remained uneven.
Diana Mousina, deputy chief economist at AMP, said continued earnings growth and resilient economic data made it difficult to take a completely bearish position on equities. She indicated that the AI investment trade was evolving rather than necessarily coming to an end.
Gold, meanwhile, failed to attract the expected safe-haven demand during the latest bout of market turbulence. The metal traded flat at $4,021.99 an ounce in London after falling nearly 3% on Thursday, leaving it down 3.4% for the week.
Oil price movements, geopolitical developments and evidence that AI investments are generating returns are expected to remain key factors shaping global financial markets.
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