US futures
Dow futures -0.03%, S&P 500 futures -0.1% & Nasdaq futures -0.3%
European futures
FTSE -0.7%, DAX -0.8%
- US stocks point to a lower open, with tech leading the move lower
- AI worries return and high oil prices add to worries
- Netflix reports after the open
- Oil prices rise with Brent at a 5-month high
U.S. stocks fall as AI worries return, Brent hits a 5-month high
U.S. markets are pointing to a mixed open on Tuesday, with tech stocks once again under selling pressure as investors weigh up the cost of financing AI businesses together with the prospect of higher interest rates.
The latest sell-off in tech stocks reflects an increasingly jittery market, with investors concerned over the heavy spending and borrowing needed to build out AI infrastructure.
A South Korean AI company, Elice Group, has plunged 30% on its stock market debut, while U.S. cloud computing firm CoreWeave is once again falling, down 4.5% after tanking 25% last week amid concerns about the financial risks associated with its expansion.
Rising oil prices have intensified inflation concerns, adding to these worries. Markets are pricing in around an 85% probability that the Fed will hike rates again before the end of the year. Higher interest rates could make it more expensive for companies to fund expansion and for consumers to spend, putting further pressure on tech stocks already facing questions over the cost of AI investment.
Corporate movers
Netflix is due to report after the close, as the company cuts 6% of its workforce amid concerns over slowing revenue and engagement growth. Its share price has fallen 42% over the past 12 months as competition from YouTube has gained momentum.
SpaceX will also report after the close, with its second quarterly results since going public in June. The results come as Elon Musk said he planned to give one SpaceX share to every child in the U.S. next year.
General Motors, the carmaker, fell 5% despite posting Q3 earnings that beat analyst expectations. The company also raised its free cash flow expectations and narrowed its 2026 full-year guidance. While GM announced a new stock buyback programme of $20 billion, it did not provide a timeframe for the repurchases.
Dow Jones forecast – technical analysis
The Dow Jones trades within a descending channel dating back to early August. The price has recovered from the October 1 low around 50,550, near the lower band of the channel, but gains are being capped by the upper band and the 50 EMA around 52,000.
Buyers would need to extend gains above this level to bring 53,000 into focus, ahead of 53,800, the September high. Above here, attention turns to 54,750, the record high.
Failure to break above 52,000 could see the price pull back towards 51,000, the round number and midpoint of the falling channel, before exposing the 200 EMA around 50,600.
FX markets – USD falls, GBP/USD jumps
The U.S. dollar is down around 0.2%, trading towards the lower end of October's range. The move lower comes amid weakness in tech stocks, while recent volatility has dampened expectations of a Fed rate hike this month. Markets are pricing in just a 17% chance of a 25-basis-point hike this month, although there is an 85% chance of a rate hike before the end of the year.
EUR/USD is rising amid a weaker U.S. dollar as lawmakers in France debate the budget again this afternoon. This comes after authorities imposed curfews in several cities on Monday to curb anti-government protests. Concerns over France's long-term public finances have pushed its bonds lower and weighed on the euro, limiting gains despite the weaker dollar.
GBP/USD is rising amid a weaker U.S. dollar and mixed UK jobs data. Unemployment unexpectedly fell to 4.7%, down from 4.9%, while the number of payrolled employees also unexpectedly rose by 13,000, defying expectations of a 26,000 decline. However, job vacancies fell by 21,000 to 691,000, well down from 1.3 million during the pandemic. Wage growth also accelerated to 3.7%, at a time when higher energy prices are adding to inflationary pressures.
Following the data, markets have increased expectations of a more hawkish Bank of England, with the central bank widely expected to hike rates at its November meeting. However, falling vacancies suggest the labour market remains under pressure, even as wage growth continues to add to inflation concerns.
Oil rises as Middle East tensions lift supply concerns
Oil prices are rising on Tuesday, with Brent reaching a five-month high of $110 a barrel while WTI reached a monthly high of $100. The gains reflect a rising risk premium amid the ongoing conflict in the Middle East.
Yemen's Houthis have ramped up attacks on Saudi Arabia, hitting several targets, including energy infrastructure, airports and military bases. Riyadh International Airport and an Aramco site in Yanbu were reportedly hit, adding to concerns over regional stability.
These renewed attacks have heightened fears over energy supplies, keeping oil prices supported as markets weigh the risk of further disruption. Higher oil prices could also add to inflationary pressures and complicate the outlook for interest rates.
Looking ahead, U.S. crude oil stockpiles are expected to have fallen last week, alongside refined product inventories, which could also support prices.
