Global Markets Mixed as Tech Stocks Slide and Gold Regains Ground

Global Markets Mixed as Tech Stocks Slide and Gold Regains Ground

Alphabet earnings, AI concerns and US economic data dominate investor focus

Global markets showed mixed signals on Wednesday as US stock futures edged higher, despite a sharp sell-off in software stocks linked to artificial intelligence. Investors are closely watching earnings from major technology firms, upcoming US economic data and renewed geopolitical tensions that have pushed gold prices higher.

US stock futures edge higher despite tech sell-off

US equity futures traded modestly higher, even as concerns around AI-exposed software stocks continued to weigh on sentiment.

Key market moves included:

• Dow futures rising 0.3%, supported by gains in defensive and consumer-focused stocks
• S&P 500 and Nasdaq futures up slightly, suggesting cautious optimism ahead of major earnings
• Previous session losses driven by AI leaders, with Nvidia and Microsoft both falling close to 3%

Investors have become increasingly wary that heavy investment in AI infrastructure may not deliver short-term returns, particularly as competition intensifies across the sector.

AI disruption sparks sharp falls in software shares

The negative mood in technology stocks deepened following the launch of a new AI legal analysis tool by Anthropic. The development heightened fears that AI could disrupt traditional data, publishing and software businesses.

Market reaction included:

• Sharp declines in firms such as Thomson Reuters and LegalZoom, which are exposed to legal and data services
• Heavy losses in PayPal and Expedia, both falling more than 10%
• Around $300 billion wiped off software-related indices, according to market estimates

Analysts noted that investors are reassessing whether AI will benefit the wider technology ecosystem or create long-term pressure on established business models.

Alphabet earnings in focus as AI spending questioned

Attention now turns to earnings from Alphabet, which are due after US markets close. Investors will be closely analysing how much the Google owner is spending on AI and whether those investments are beginning to pay off.

Key points to watch include:

• Alphabet’s multi-billion-dollar investment in AI data centres and chips
• Strong recent performance driven by its Gemini AI model and a partnership with Apple
• Growing belief among analysts that Alphabet may now be leading the AI commercialisation race, ahead of rivals such as Microsoft

However, there are concerns that positive results from Alphabet could further expose weaknesses in the broader AI ecosystem.

Fed adviser resignation adds political and policy uncertainty

Reports suggest Federal Reserve Governor Stephen Miran has resigned from his role as a White House economic adviser, allowing him to remain on the Fed’s board beyond January.

The move has implications for monetary policy:

• Miran has been a strong advocate for aggressive interest rate cuts
• His stance aligns with calls from President Donald Trump to stimulate growth
• Critics argue his position raises questions about the Fed’s independence

Markets are watching closely as Kevin Warsh is widely expected to replace Miran as Fed Chair.

US services data expected amid rate uncertainty

With the January jobs report delayed due to the partial government shutdown, investors are turning their attention to other economic indicators.

Upcoming data includes:

• The ISM services PMI, expected to ease slightly but remain in expansion territory
• Signs that inflation remains above the Fed’s 2% target, limiting scope for rate cuts
• Evidence that the US economy is still relatively resilient, despite labour market softening

Gold prices rebound as geopolitical tensions rise

Gold prices climbed back towards $5,100 per ounce, supported by renewed safe-haven demand.

Drivers behind the move include:

• Reports of rising tensions between the US and Iran
• Incidents involving drones and shipping in the Middle East
• Lingering uncertainty despite planned diplomatic talks

The rebound follows a sharp recovery from recent losses, underlining gold’s role as a hedge during periods of global instability.

Sources: (Investing.com, SKYMoney.com, BBC.co.uk)