Markets retreat as AI fears trigger risk-off wave

Global news

Tensions in financial markets are rising again, with investors reducing risk exposure after a wave of selling triggered by growing concerns over artificial intelligence. The U.S. technology sector has been the main epicenter of the correction, dragging Wall Street indices lower and fueling a climate of uncertainty that has quickly spread across other asset classes. Futures on U.S. indices fell by 0.4%, while Asian equities dropped 1.4%, snapping a six-session winning streak. The MSCI All Country World Index is now on track to close its first back-to-back weekly decline of the year. Europe is also bracing for a weaker open amid heightened volatility.

Following the sharp pullback in the previous session, gold and silver attempted a rebound, supported by rising risk aversion. U.S. Treasuries, which had benefited from defensive buying, partially gave back gains, with the 10-year yield climbing back to 4.11%. The dollar strengthened, reflecting demand for safe-haven assets.

At the heart of the turbulence lies a shift in sentiment toward AI. While enthusiasm for innovation has supported much of the equity rally in recent years, concerns are now emerging about the speed at which new tools could reshape entire industries, putting pressure on established business models. Recent losses have wiped out the S&P 500’s year-to-date performance, while the Nasdaq 100 is posting a steeper decline.

In Asia, the impact has so far been more contained, despite losses in Chinese markets ahead of the Lunar New Year. However, analysts warn that the high degree of correlation between markets could amplify any further shocks originating from the United States.

Attention now turns to U.S. inflation data. A reading above expectations could further reduce the likelihood of near-term rate cuts, reinforcing the “higher for longer” interest-rate scenario. With inflation still structurally persistent, markets appear vulnerable to renewed revisions in monetary policy expectations.

Corporate Highlights

Among corporate developments, Clear Street Group Inc. has postponed its U.S. IPO after significantly lowering its expected valuation, a sign of a less favorable environment for new listings. On the artificial intelligence front, OpenAI is expanding its technological partnerships by announcing its first model capable of running on chips produced by Cerebras Systems Inc., in a move aimed at diversifying away from traditional suppliers such as Nvidia Corp. In banking, Westpac Banking Corp. reported higher first-quarter profit driven by growth in mortgages and institutional lending. Meanwhile, tensions are rising in the port sector: CK Hutchison Holdings Ltd. has threatened legal action against A.P. Moller-Maersk A/S over control of two terminals in the Panama Canal area.

Key market moves

S&P 500 futures fell 0.3% as of 6:48 a.m. London time, while Nasdaq 100 futures declined 0.4% and Dow Jones Industrial Average futures dropped 0.3%. In Asia, the MSCI Asia Pacific Index lost 1.4% and the MSCI Emerging Markets Index fell 0.8%. S&P/ASX 200 futures slid 1.4%, Hong Kong’s Hang Seng declined 1.9%, and the Shanghai Composite fell 1.3%. In Europe, Euro Stoxx 50 futures were little changed.

The euro slipped 0.1% to $1.1855, the yen weakened 0.4% to 153.31 per dollar, and the offshore yuan edged down 0.1% to 6.9072. The British pound also fell, down 0.2% to $1.3598. Bitcoin rose 0.4% to $66,054.16, while Ether gained 0.3% to $1,928.24.

The yield on the U.S. 10-year Treasury rose by one basis point to 4.11%. In Europe, Germany’s 10-year Bund yield fell to 2.78% (-1 basis point) and the UK 10-year Gilt yield declined to 4.45% (-2 basis points). In Asia, Japan’s 10-year yield slipped to 2.210% and Australia’s to 4.75%.

Spot gold gained 0.6% to $4,951.83 per ounce, while West Texas Intermediate crude fell 0.2% to $62.73 per barrel.

Andrea Pelucchi