AI Search: Markets steady as AI spending worries cool and Hormuz talks ease oil
Top story
Global shares are steadying after a technology-led selloff driven by worries over heavy AI spending. The pullback in crude is the other main global development: Qatar-brokered talks that could reopen the Strait of Hormuz have eased immediate supply-disruption fears, pulling oil lower and lifting gold as traders rotate toward safety while parsing mixed central bank signals ahead of a packed earnings week.
The tension at the heart of the session is straightforward. The same AI investment theme that powered equity markets higher is now the source of the selling pressure, while the geopolitical risk premium in oil is deflating at the same time that safe-haven demand for gold is building. Markets are repricing both sides of the risk ledger at once.
Asia Pacific
South Korea's October trade data delivered the region's standout print, with exports soaring 93.7% year on year to $115.28 billion and the trade surplus widening to $42.50 billion, driven by AI chip demand. That surge sits awkwardly beside a factory activity reading that slowed to an eight-month low, a divergence that suggests export strength is concentrated in semiconductors while broader manufacturing softens.
Taiwan's chip-heavy index dropped sharply despite the dominant chipmaker's public reaffirmation of its commitment to the island at a Hsinchu R&D opening. The reaffirmation was aimed at geopolitical nerves, but global AI-led selling kept pressure on the stock and the index anyway — a case where the narrative was reassuring and the price action was not.
Japan's October manufacturing PMI slowed to 53.3, with cost pressures rising even as output growth softened. Australia's central bank is widely expected to raise rates, with markets pricing a high probability of a hike, a hawkish tilt that weighed on Australian assets. In Southeast Asia, Philippine inflation expectations sharpened after the central bank projected October CPI well above target, while Singapore-linked haze enforcement escalated when a regional resources company agreed to an assessment by Singapore government panel assessors at its own expense.
Europe
Fitch shifted France's sovereign outlook to negative, citing weaker growth, higher borrowing costs, and a wider deficit. The move lands on a eurozone already digesting a mixed industrial picture, and it weighed on the region's large markets.
Germany's manufacturing PMI showed sustained expansion in factory production despite accelerating input cost inflation, wage strikes, and gas storage shortfalls. That resilience in the eurozone's largest manufacturing economy is doing some offsetting work against the French fiscal signal, though the two developments point in different directions for regional risk.
Poland's October flash inflation fell below forecasts and moved closer to the central bank's target band, a disinflationary positive. That sits against a further escalation in the country's constitutional and political standoff, as the government pushed ahead with changes at the top court and protests continued — a case of improving macro data and deteriorating institutional risk arriving together.
North America
US futures point higher ahead of Tuesday's midterm elections and a heavy slate of major earnings. The steadying tone after the tech selloff suggests buyers are willing to re-engage, though the earnings week will test whether AI spending concerns have substance.
Canada's economy stalled in August and likely contracted in September, pointing to softer third-quarter growth, with a federal budget due Thursday. Brazil's record public debt levels — gross debt at 82.9% of GDP and net debt at a record 70.0% in September — kept pressure on Brazilian assets after the incumbent's election win, underscoring a deteriorating fiscal backdrop. Mexico saw a corporate-financing development as the state power company prepared a roughly US$1 billion share sale to fund transmission-line expansion.
Policy / macro
Central bank signals dominated. Egypt's central bank delivered a fresh 100 basis point rate hike, with local banks beginning to reprice savings and lending products. The Philippine central bank's elevated CPI projection sharpened inflation expectations. Australia's central bank is poised to hike, with markets assigning a high probability to the move. The Federal Reserve's signal mix remains unresolved, and that uncertainty is one of the supports behind gold's climb.
On energy policy, OPEC+ agreed to freeze crude oil production targets for December 2026, keeping Saudi Arabia's allocation unchanged. Fitch separately affirmed Abu Dhabi's AA rating with a stable outlook, noting higher oil production should support a 2026 budget surplus.
Market reaction
Equities steadied after the tech-led selloff, with US futures modestly higher. Taiwan's chip-heavy index fell sharply, and Japanese equities slipped on the softer PMI. Gold climbed, supported by softer oil and Fed uncertainty. Crude pulled back on easing supply-disruption fears from the Hormuz talks. Crypto sentiment stayed fragile near recent lows after a major exchange hack. Emerging market currencies, including the rupee and peso, faced divergent paths on oil and inflation dynamics.
What this news leaves open
- Whether AI spending concerns deepen or fade as the packed earnings week unfolds.
- Whether the Qatar-brokered talks actually reopen the Strait of Hormuz, and what that does to the oil risk premium.
- How the Fed's signal mix resolves, and whether gold's bid holds.
- Whether South Korea's export surge can coexist with its slowing factory activity, or whether the divergence narrows.
- What Canada's Thursday federal budget delivers against a stalling economy.
- Whether Poland's disinflation can offset the institutional risk from its court standoff.
Sources
Ezbrisk weighs each event against the market reaction and publishes a verdict with an overreaction reading. How the methodology works