US tech stocks fall amid renewed AI valuation concerns

US stocks slid on Thursday as renewed pressure on AI-linked and broader tech shares weighed on sentiment. The S&P 500 fell 1%, the Nasdaq dropped 1.70%, and the Dow lost 317 points. According to Reuters, “concerns around stretched AI valuations resurfaced following mixed earnings updates, dragging Qualcomm down 4.50%, AMD 7%, and Tesla 2.80% ahead of its shareholder meeting. Oracle and Palantir declined 2.60% and 6.80%, while heavyweight tech names like Nvidia (-3.80%), Microsoft (-1.80%), Amazon (-2.30%), and Meta (-2.70%) also retreated.” The selloff was compounded by signs of a softening labour market, with Challenger reporting 153 000 announced job cuts in October—the highest for that month in over two decades—driven partly by AI-related restructuring. With the government shutdown restricting access to official data, investors leaned on private indicators that suggested a weaker economic backdrop, adding to risk-off sentiment.

European stocks retreated, erasing the previous session’s brief rebound as investors digested another round of mixed corporate earnings and signs of rising unemployment in the US. The STOXX 50 fell 1%, while the STOXX 600 slipped 0.70%. Trading Economics noted that “Commerzbank dropped 2% after reporting an unexpected 7.90% year-on-year decline in net profit. Diageo fell 6.50% after lowering its full-year guidance, and Maersk lost 5.10% despite delivering solid results. Rheinmetall edged 0.50% lower even after reporting a 20% increase in sales. By contrast, DHL climbed 5.40% after posting resilient earnings despite global trade headwinds, AstraZeneca gained 2.90% on record quarterly revenue and steady guidance, and Sainsbury’s advanced 1.40% after lifting its outlook.”

Meanwhile, the euro edged higher above $1.15 as markets reassessed diverging policy paths between the European Central Bank and the Federal Reserve. The ECB is still expected to maintain rates for an extended period, with rate-cut expectations pushed out—money markets now assign only a 45% chance of a cut by September 2026, down from over 80% in October. Several ECB officials reinforced a cautious stance, noting inflation risks remain. In contrast, the US dollar weakened after data showed layoffs in October surged to their highest level in 20 years, reigniting expectations of a near-term Fed rate cut and offsetting stronger labour and activity data released earlier in the week.

Chipmakers led Chinese equities higher on Thursday after authorities instructed that new state-funded data center projects must exclusively use domestically produced AI chips, reinforcing Beijing’s drive for tech self-sufficiency. The policy shift bolstered sentiment across the semiconductor sector and extended the market’s rebound, with the Shanghai Composite up 0.97% and the Shenzhen Component rising 1.73%. Investors also awaited China’s October trade and inflation data later this week for further signals on economic momentum. Meanwhile, Premier Li Qiang reiterated that China’s economy is on track to surpass CNY 170 trillion within five years and pledged to further open the consumer market to global firms following the recent trade agreement with the US.

The FTSE/JSE All Share index closed modestly higher, supported by gains in select resource and industrial counters, while financials were more mixed as global risk sentiment remained cautious. The rand firmed slightly against the dollar as investors weighed softer US labour-market signals and renewed expectations of a potential Fed policy pivot, while South African government bond yields edged lower in response to improved demand for local fixed income. Corporate news also shaped trading activity, with Truworths reporting flat early-year sales as its African operations continued to struggle, and Pepkor completing the acquisition of several Retailability brands as part of its expansion strategy. Overall, the local market tracked the steadier tone seen across emerging markets, though global policy expectations and commodity price movements remained the key drivers of direction.

Oil prices edged slightly higher as easing supply-glut concerns and OPEC+’s pause on production increases provided some support, though gains remained capped by weak global demand and elevated inventories. Brent traded near $63 a barrel while WTI hovered around $60, with analysts warning that demand softness still poses downside risk. Meanwhile, gold extended its rebound above the $4 000/oz mark, supported by a weaker US dollar and renewed safe-haven demand as uncertainty around the global economic outlook and US policy direction persisted.