The technology sector continued to face pressure as disappointing earnings from Amazon and Intel intensified concerns over investments in artificial intelligence. Nasdaq 100 futures declined by 2%, with investors gravitating towards traditional safe havens such as U.S. Treasury bonds and the Swiss franc.
Amazon and Intel Lead Tech Stock Declines
In after-hours trading, Amazon shares plummeted 7.3%, while Intel saw a precipitous 23% drop. These setbacks have reignited scrutiny over the companies’ capital expenditure in AI-related projects, prompting a retreat from AI-focused stocks.
“The scale of capital expenditure by Amazon and Intel is being questioned anew,” commented a market analyst on the unfolding developments.
Bitcoin also edged down by 0.5%, falling to approximately $78,400. Uncertainty in the cryptocurrency market was exacerbated as Binance, the world’s largest crypto exchange, temporarily halted deposits and withdrawals amid investigations into a suspected cyberattack.
Oil Gains Amid Geopolitical Tensions, Precious Metals Decline
Speculation that the U.S. might resume military actions against Iran spurred concerns over potential disruptions in energy supply, pushing Brent crude up by 1.4% to $116.45 per barrel.
Conversely, precious metals could not escape the selling pressure, with gold dipping below $4,000 per ounce and silver falling 2%, heading for the lowest close since November.
Across all maturities, U.S. Treasury bonds saw increases, while the Swiss franc led gains against the dollar among G10 currencies. The Japanese yen maintained its strength after the Bank of Japan (BOJ) opted to hold its rates steady, meeting market expectations.
Bank of Japan Holds Rates; Inflation Reaches New Milestone
At its meeting on October 30, the BOJ kept its policy interest rate unchanged at 1.25% with a majority vote among its nine-member board. The bank cited the need to assess the implications of its previous rate hike on the economy and prices. A proposal by board member Hajime Takata to raise the rate to 1.5% was outvoted.
The BOJ reported that core inflation had aligned with its 2% target when adjusted for temporary effects, marking a first since the introduction of the price stability target in January 2013. This transition reflects a shift from prolonged deflation to an economy witnessing simultaneous wage and price growth, a process longer than anticipated due to entrenched deflationary expectations.
The BOJ emphasized the need to monitor whether inflation stabilizes sustainably around the 2% mark. The bank indicated its readiness to continue with rate hikes depending on the economic outlook, pricing, and financial conditions. Market anticipation for a hike in the December meeting is building.
The current market landscape demonstrates that expectations for growth in AI demand are insufficient to alleviate concerns regarding corporate investment spending. With safe haven demand leading bonds and Swiss franc gains, and declines in gold and silver, investors remain selective in defensive strategies. Meanwhile, general risk aversion in Bitcoin is compounded by Binance-related uncertainty.
