Nasdaq rebound fails to allay AI fears. Europe closes in the red; Milan down 0.9 per cent

(Il Sole 24 Ore Radiocor) -  The rebound in the Nasdaq and tech shares following the heavy sell-off the previous day was not enough to prop up the European stock markets, which, despite recovering from their intraday lows, closed in the red on the final trading day of the week. Milan thus ended down 0.9 per cent, Paris closed down 0.8 per cent and Frankfurt down 2.02 per cent, whilst cyber-attacks continued in several countries across Europe.

Turning back to the tech sector, uncertainties regarding the future of the artificial intelligence sector remain unresolved, amid fears of a potential investment bubble and concerns that a Democrat-led US Congress might introduce stricter controls on the sector. ‘The scale of the sell-off is largely due to the presence in the market of leveraged investors, including hedge funds, specialised investment teams (PODs) and retail investors, as well as institutional investors with mandates characterised by strict risk constraints. “When panic sets in, many market participants try to exit the market at the same time,” explains Kristofer Barrett, Head of Global Equities and fund manager at Carmignac. “In any case,” he adds, “we are not yet seeing any slowdown amongst companies building data centres or manufacturing chips. At the same time, valuations have fallen significantly and appear attractive, provided that end-user demand for artificial intelligence does not suffer a sharp decline.”

Wall Street is trading mixed, with the Dow Jones in negative territory, whilst the Nasdaq, following the sharp slump the previous day, is rebounding and posting a gain of over one percentage point. In the equity market, Micron Technology is rising strongly following the previous day’s slump; the same story for Nvidia Corp . Buying interest in Alphabet, Meta Platforms and Tesla . SpaceX is also recovering, whilst Microsoft Corp and Apple are down.

At a macro level, there is encouraging news: the October employment report is, in fact, better than expected. Last month, 165,000 jobs were created (excluding the agricultural sector) compared with the previous month, whilst analysts had expected 59,000 new jobs. The unemployment rate fell from 4.2% to 4.1%, against expectations that it would remain at 4.2%. Average hourly wages rose by 14 cents, or 0.37 per cent, to $38, representing an annual increase of 3.12 per cent.

Meanwhile, on the geopolitical front, President Trump discussed the possibility of resuming attacks against Iran during a meeting at the White House with his national security team. This was reported by Fox News, citing senior administration officials. The plan would be to carry out new air raids against targets in Iran, taking advantage of the new moon in the Middle East, on 9 November. The darkness next Monday would, in fact, be ideal for launching new military operations.