AI drives global markets as MSCI emerging Asia hits new high

European shares ended lower on Thursday, mirroring a late sell-off in North American markets amid mounting concerns over hefty artificial intelligence (AI) capital spending, the prospect of sustained high interest rates from the Federal (Fed) Reserve and a slew of disappointing earnings.

The pan-European STOXX 50 slipped 0.50% to 6 004 points, while the broader STOXX 600 shed 0.60% to 618, retreating from a record peak notched in the prior session. AI-exposed firms bore the brunt, with ASML, Prosus and Infineon each tumbling about 2%. Adyen plunged more than 21% after missing profit forecasts, while Sanofi dropped 4.50% following the abrupt ousting of its CEO amid a faltering vaccine turnaround. Mercedes-Benz also dipped 1.50% on weaker profits. Siemens bucked the trend, edging higher after peaking at a 7% gain during the day, buoyed by upgraded earnings guidance on a robust fiscal year start.

Germany’s DAX 40 closed nearly flat at 24 853, reflecting wary sentiment in both Europe and the US. In the meantime, London's FTSE 100 dropped over 0.70% from its previous record close, dragged down by energy, mining and banking sectors. Oil giants Shell and BP fell 1% and 3.40%, respectively as crude prices softened. Miners suffered too on easing metals prices with Rio Tinto having lost 1.10%, Antofagasta 3.70%, Glencore 2.40% and Anglo American 2.10%. 

US stocks wiped out early advances to turn sharply lower on Thursday, prolonging the volatility from the prior session amid renewed tech sector weakness and growing doubts over a hawkish Fed stance ahead of the inflation report. The Nasdaq 100 dropped over 1.50%, with the S&P 500 and Dow each shedding 1%. AI-linked sectors swung wildly, fuelled by doubts over surging capital spending on computing infrastructure, while software services stocks stayed subdued on fears that AI automation could erode their dominance. 

Big tech names led the retreat: Apple, Amazon, Meta, Broadcom, and Palantir each lost more than 3%. Banks faced headwinds too, pressured by White House calls to cap credit card interest rates. Cisco tumbled 11% on a downbeat outlook.

In Asia, mainland benchmarks scaled fresh record highs on Thursday. South Korea's KOSPI notched an all-time peak, powered by booming global demand for AI chips. The MSCI emerging Asia index rose about 0.70% to a new summit, lifted by a 3% record-breaking leap in the KOSPI. Semiconductors drove much of the momentum, with Samsung Electronics and SK Hynix surging 6.40% and 3.30% respectively – extending South Korea's winning streak to four sessions.

Japan's markets delivered a broad-based advance across shares, bonds and the yen, sparked by Sanae Takaichi's landmark election as Prime Minister. The Nikkei 225 briefly pierced 58 000 for the first time, touching an intraday high of 58 015.08 before easing to close marginally down at 57 639.84. Japanese corporates showed mixed results: Shiseido rocketed 15.80%, its biggest daily jump since 2008, on forecasts of a profitability rebound. Honda Motor, however, slid 3.50% after disappointing earnings. Eyes now turn to SoftBank Group, whose upcoming results could shed light on funding plans for its expansive AI investments. Meanwhile, Hong Kong's Hang Seng slipped 0.89%, while Shanghai's Composite gained 0.05%.

Due to the upcoming Lunar new year celebrations, mainland China markets are scheduled to be closed from 16 to 23 February. 

South African equities ended mixed: the JSE All Share Index (ALSI) edged up 0.38%, the Top 40 rose 0.35% and the Industrial index advanced 0.66%. Resources lagged, however, with the Resource 10 dipping 0.12% and Metals & Mining off by 0.21%.

Commodities mirrored the softer tone. Brent crude fell 2.88% to $67.40 per barrel, while precious metals tumbled with gold shedding 2.70% to slip below $5 000 per ounce, silver plunged 10.05% and platinum dropped 5.94%.