Stock market: Midterm rally fizzles out; Nasdaq slump drags down tech shares in Milan too (-1%)
Fears over an AI and chip bubble resurface following the Democrats’ victory
(Il Sole 24 Ore Radiocor) - The tide is turning on global markets, and the enthusiasm that fuelled yesterday’s stock market rally – in the wake of the Democrats’ landslide victory in the mid-term elections – is giving way to fears of a setback in the development of AI. The Nasdaq (-4.3 per cent) on Wall Street has borne the brunt of this, although the sell-off in tech shares has also swept across Europe. After a positive start to the day, European markets reversed course and closed lower. Against this backdrop, Milan (-1 per cent) was the day’s worst performer, weighed down by losses at St (-9.33 per cent) and Technoprobe (-9.28 per cent).
In reality, the tech sector’s slump was not entirely unexpected. Even before the election, fears had begun to spread amongst investors that a predominantly Democratic-controlled Congress might impose stricter controls on the development of data centres and AI-related infrastructure. The real surprise was rather that the negative reaction in the tech sector did not come immediately after yesterday’s results. “I think today’s move is a catch-up to what should actually have happened yesterday,” explains Brij Khurana, a portfolio manager at Wellington quoted by the Financial Times, who describes today’s session as a sharp “return to reality”. Turning to the Milan stock exchange, the tech sector’s debacle is overshadowing the positive signs emerging from the earnings season. Despite this, Tenaris (+3.66 per cent), Amplifon (+2.76 per cent) and Fineco (+2.43 per cent) stand out.
On the foreign exchange market, the euro is trading at 1.1229 against the dollar (up from 1.1220 at yesterday’s close). The dollar/yen cross stands at 157.85 yen (from 158.37), whilst the euro/yen rate is at 177.25 (from 177.70). On the energy front, WTI crude oil is up 2.4 per cent at $90.2 per barrel and Brent crude is up 2.3 per cent at $96.8. Gas prices are also up 2.5 per cent at €90.3 per megawatt-hour in Amsterdam. Gold has returned to above $4,100 an ounce, with spot delivery at $4,115 (+1.3 per cent).
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