A renewed wave of AI-related concerns weighed on global equities on Tuesday, as investors remained on edge with the commencement of voting in pivotal US midterm elections. Opinion polls indicate that the Democrats are positioned to secure the House, whereas the Senate remains too competitive to determine a clear outcome. A sweep by Democrats may result in enhanced scrutiny of AI and increased regulation of corporations. “In the case of a full blue sweep, I would expect some populist measures against AI. The narrative against data centres would get a tailwind,” said Alexander Lis. Big Tech’s disappointing earnings and significant capital expenditure goals have caused concern among Wall Street in recent days, intensifying the examination of the electoral outcome. Futures tracking the benchmark S&P 500 dropped 0.17%. The index has fallen for three consecutive sessions. The pan-European STOXX 600 index experienced a decline of 0.4%, settling at 646.67 points.
South Korea’s KOSPI benchmark fell 3.6%, while Taiwan’s index also dropped 3.6% for its steepest one-day decline since late July. MSCI’s gauge of stocks across the globe slipped 0.29%. The dollar index, which measures the currency against a basket of peers, was flat at 101.84. It reached a one-month low on Monday. The yield on the US 10-year Treasury note rose 4.3 basis points to 4.937%. A surprise Republican sweep would likely elevate yields and strengthen the dollar, according to Steve Englander. Apple on Monday projected a decline in gross margins for the important holiday quarter, attributing this to increasing memory-chip costs, and indicated that anticipated services revenue growth significantly lagged behind Wall Street forecasts. The iPhone maker’s forecasts have exacerbated the pessimism in markets, which have been underwhelmed by the lacklustre results from major technology firms.
Brent crude futures increased by 1.6%, reaching a price of $106.47 per barrel. Oil prices have experienced significant volatility this week due to contradictory signals from the US and Iran regarding the resolution of the conflict in the Middle East. The US executed strikes on Iran’s Qeshm Island in the Strait of Hormuz, a US official informed Reuters on Monday, corroborating a prior report. Hours prior, US President Donald Trump remarked that a deal to conclude the conflict “could happen”. Qatari mediators have also journeyed to Tehran to engage in discussions with Iranian Foreign Minister Abbas Araqchi regarding a possible agreement between the US and Iran.
“I don’t think you could build a high conviction view based on the Iran developments right now. And I think more investors should think the same way as I do,” said Lis. The Chinese yuan depreciated relative to the US dollar following the announcement from the People’s Bank of China regarding an increase in the foreign exchange reserve ratio, a strategic decision intended to curb the prolonged appreciation of the yuan. Cryptocurrencies exhibited volatility following the recent hacking incident involving Binance. Bitcoin increased by 0.4% to $77,002.83, while ether remained stable at $2,264.13.
