Asian stock markets fell on Monday as doubts about how long the artificial intelligence investment boom can last hung over technology shares. High oil prices, meanwhile, kept government bonds from fully benefiting as a safe haven.
Japan’s Nikkei dropped 0.5%, while South Korea’s market lost 0.8% after shedding 16% in October. MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.4%.
In Europe, EUROSTOXX 50 futures firmed 0.1% and DAX futures were flat. On Wall Street, S&P 500 futures edged up 0.4% and Nasdaq futures gained 0.6%. The Nasdaq fell almost 7% in October, its worst month since the tariff rout of April 2025.
Stress signs in credit and metals
Worries about negative cash flow and the huge scale of AI capital spending pushed up the cost of insuring against corporate defaults last week. Gold touched a one-year low amid talk that stressed investors were selling the metal to meet margin calls.
US midterm elections add another uncertainty. A Democratic win in one or both houses of Congress could bring more political hurdles for data centres.
Crypto markets were also uneasy. Binance, the world’s biggest cryptocurrency exchange, came back online on Sunday after hackers stole billions from the platform last week, and withdrawals followed.
Big earnings this week
The pressure raises the stakes for results from Apple, AMD and Palantir this week. Intel’s shares tumbled almost 29% on Friday.
Goldman Sachs analysts expect spending by the largest cloud companies, known as hyperscalers, to almost double to $800 billion this year and rise to $1.2 trillion in 2027. They also forecast S&P 500 earnings per share growth of nearly 30% in 2026, slowing to 18% next year.
“Earnings results have underscored the fundamental challenge facing equity investors – earnings growth is strong, but it is no longer accelerating,” wrote Ben Snider, Goldman’s chief US equity strategist, in a note. He added that third-quarter results support the bank’s view that AI investment will keep growing, but that the growth rate of AI capex is peaking.
Rate hike bets
The fall in equities gave some relief to bonds, as investors wondered whether a prolonged stock selloff could stop the US Federal Reserve from raising interest rates in December. Futures still point to a 72% chance of a quarter-point increase. However, they now price in only 55 basis points of total tightening, down from more than 70 basis points a month ago.
The 10-year US Treasury yield edged up to 4.952%, still well below its October peak of 5.3645%. The 2-year yield stood at 4.612%.
Several central banks meet this week. Markets expect rate hikes from the Reserve Bank of Australia, the Bank of England and Sweden’s Riksbank, while Norway’s Norges Bank is seen holding rates.
US data in focus
The US ISM manufacturing survey for October is due later on Monday. The payrolls report on Friday is the key release of the week. Forecasts centre on a rise of 65,000 jobs, after a disappointing 29,000 in September, with unemployment steady at 4.2%.
Currencies and commodities
Major currencies were largely quiet. The euro was flat at $1.1156, and the dollar was barely changed at 157.62 yen.
Oil prices eased after Iranian and Qatari officials held a third straight day of talks aimed at securing a deal to end the US-Israeli war on Iran. Brent futures fell 1.5% to $111.72 a barrel, following a 13.6% jump in October. US crude futures slipped 1.7% to $102.37 a barrel.
Gold, which pays no interest, rose 0.6% to $3,898 an ounce after falling 6.8% last month.
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