AI Search: AI demand steadies equities as oil jumps on Saudi refinery strike
Top story
The session's anchor was a combination of AI-driven tech strength and a missile attack on Saudi Arabia's largest refinery. The strike pushed crude sharply higher and reignited supply concerns, while equities found support from the same AI demand story that has carried sentiment in recent weeks. With a widely expected Federal Reserve decision on deck, markets held a steady tone rather than taking strong directional bets.
Market reaction
- US equities: steady, with a mixed earnings slate producing several beats and raises alongside notable misses.
- Taiwan and South Korea equities: rose, lifted by robust AI-driven tech demand and a South Korean GDP beat.
- Japan equities: drifted cautiously higher even as accelerating inflation strengthened the case for another Bank of Japan rate hike.
- Spain and Italy equities: eased alongside a broadly weaker European tape.
- Germany equities: edged up on a six-month-high Ifo reading.
- Oil: climbed sharply on the refinery strike.
- Copper: wavered near a two-week high ahead of the Fed.
- Crypto: ticked higher alongside the rate decision.
- US dollar: held recent gains.
- New Zealand dollar: slid after the RBNZ's surprise hold.
Asia Pacific
Taiwan and South Korea led the region. South Korea's economy grew faster than forecast in the third quarter, driven by strong exports and investment, and the AI-driven tech demand story underpinned both markets. Taiwan's central bank added a hawkish note, signaling it could raise rates next year if inflation runs well above its 2% threshold.
Japan's tape was more cautious. September trend inflation accelerated, with the Bank of Japan's core consumer price gauge up 3.2% annually and services producer prices up 3.7%, strengthening the case for another rate hike. That mix — equities drifting higher while rate-hike odds build — leaves Japanese assets pricing a policy tightening that has yet to arrive.
Elsewhere, the Philippines drew attention after the peso fell to a record low against the dollar, prompting the president to pledge that authorities will defend the currency as hard as possible. Indonesia's MSCI-driven selloff extended into corporate action, with a discounted share sale intensifying concerns. China offered a bright spot: profits at large industrial enterprises surged year-on-year in September, accelerating sharply from August's pace.
Europe
The European tape was broadly weaker, with Spanish and Italian equities easing. Germany was the exception, edging up as the Ifo business climate hit a six-month high — though corporate results told a softer story underneath the headline reading.
Italy's budget process advanced toward final 2027 approval, with a cabinet decision reportedly linked to EU deficit leeway and higher taxes on banks and insurers. In Spain, Banco Santander posted a stronger-than-expected third quarter, with underlying net profit rising to €3.85 billion — a reminder that individual results can diverge from the regional drift.
North America
US equities held steady through a mixed earnings slate. Beats and raises came from several large names, including an industrial-electrical equipment maker, a truck maker, a package delivery company, a copper miner, and a payments company lifting its outlook. On the softer side, a brokerage missed on revenue despite an EPS beat, a solar equipment maker cut guidance, a waste management firm missed on EPS, and a payments network slipped despite beating — a pattern where good results sometimes met high expectations.
Canada stayed in wait-and-see mode ahead of the Bank of Canada decision. Separately, Canada and the UAE signed a comprehensive economic partnership agreement, formally announced on October 28.
Policy / macro
Central banks dominated the macro picture. The Federal Reserve decision loomed as the session's key event, with the dollar holding recent gains and copper and crypto both moving with the rate decision in view. The Bank of Canada decision kept Canadian markets cautious. The RBNZ surprised with a hold, sending the New Zealand dollar lower. Japan's accelerating inflation strengthened the case for another BOJ hike, and Taiwan's central bank signaled possible hikes next year if inflation stays well above target. Brazil's central bank flagged that troubled household loans have reached their highest levels since 2012 across most credit categories and is considering tighter macroprudential steps.
What this news leaves open
- What will the Federal Reserve decide, and how will markets positioned around a widely expected outcome react?
- Will the Saudi refinery attack lead to sustained supply disruption or prove a short-lived shock to crude?
- How will the Bank of Japan weigh accelerating trend inflation against market caution?
- What concrete steps, if any, will Brazil's central bank take on household credit risks?
- Can Taiwan's hawkish signal coexist with the AI-driven demand lifting its equity market?
- Will the peso defense pledge translate into actual support, and does Indonesia's discounted share sale signal more corporate fallout from the MSCI-driven selloff?
Sources
Ezbrisk weighs each event against the market reaction and publishes a verdict with an overreaction reading. How the methodology works