AI Spending Fears Trigger Tech Selloff, Dollar and Gold Decline

Today's headlines:

Markets data:

• Swiss franc and Japanese yen lead, while the US dollar lags today.
• WTI crude oil up 2.2% to $104.25.
• Gold down 1.2% to $3,971.
• 10-year Treasury yield down 8 bps to 4.908%.
• European stocks mostly lower; Nasdaq futures -2.4%.
• Bitcoin down 1.8% to $77,448.

The session was modestly eventful, with markets digesting this week's central bank bonanza and, more importantly, the renewed selloff in technology stocks.

Amazon's earnings yesterday revived AI spending fears, sending tech shares lower today. US futures have sunk further after yesterday's drop, with S&P 500 futures down 1.1% and Nasdaq futures off 2.4%. This negative risk is spreading across broader markets.

In a similar move to last week, traders appear to be turning to bonds as a safe haven, with Treasury yields falling across the board once more. The 10-year yield has dropped 8 bps to 4.908%, confirming that falling yields are not comforting the stock market. This is especially because the reason is more tied to jitters in tech stocks themselves.

Treasury yields are falling even as oil prices remain underpinned by lingering US-Iran tensions. This has pushed WTI crude up over 2% to $104.25 today.

As the tech selloff intensifies, both the dollar and gold are falling simultaneously. Investors are clearly running out of options to hide, with EUR/USD nudging up to 1.1200 as European inflation data heats up. Germany is likely to show cooler price pressures in October, but France, Spain, and Italy are showing stronger inflation alongside flagging growth from Q3 GDP data.

Gold has dropped 1.2% to $3,971, with sellers pulling the price to its lowest since July and testing a break below $4,000. With tech shares under heavy pressure, margin calls and liquidation fears may be affecting gold, similar to what occurred in March.

Looking to the final stretch of the week, it's all on how tech shares will hold up on Wall Street later today. If selling gets uglier from here, those jitters will translate to broader markets before the Halloween weekend.