EMEA Morning Briefing: AI Jitters Ripple Through Markets

MARKET WRAPS

Watch For:

Flash PMI for eurozone, Germany, U.K., France; U.K. retail sales; trading updates from Eni, Safran, Sodexo, Volvo Car, Volvo, Saab, Holcim, Sika, Bollore, Electrolux, Signify, Autoliv

Opening Call:

European stock futures traded mixed early Friday. Asian stock benchmarks were mostly lower; the dollar was flat; Treasury yields were flat; while oil futures rose and gold fell.

Equities:

Meta Platforms signaled that it could soon go on a cash-raising spree, triggering another massive rotation trade that saw the Nasdaq Composite log its worst day since June.

"The growing concern with AI isn't about technology anymore," said Michael Antonelli, a market strategist for Baird Private Wealth Management. "It's 'how can we all fund this at once?' "

Once the main engine driving the market, the AI trade has hit a wall in recent months. After hundreds of billions of dollars poured into infrastructure build-outs, investors are growing increasingly skeptical that there will be enough user demand to generate commensurate returns.

"The financing constraint over just the last three to four months has become real," said Jim Russo, portfolio manager at AllianceBernstein. "It's become a real headwind to growth as we move from 2026 into 2027," especially for companies that are more dependent on external financing.

Forex:

Safe-haven currencies strengthened, albeit not the dollar, as geopolitical and sovereign risks unsettled markets, DBS senior FX strategist Philip Wee said.

The Swiss franc and Japanese yen reclaimed their traditional safe-haven roles, he said, while the euro remained relatively resilient despite mounting concerns over France's fiscal outlook.

"The combination of higher energy prices and heightened geopolitical uncertainty has revived concerns over stagflation, complicating the outlook for monetary policy and risk assets," Wee said.

Bonds:

After weeks of dumping Treasurys, investors piled back into the safest asset, sending the 10-year yield below 5%.

Before Thursday's wild trading session, the 10 year's yield had been at or above 5% for 19 straight days. But tech stocks sold off, and surging energy prices added fuel to the stock selloff. And a lot of that money went right into Treasurys.

"It's a classic safe-haven day in the US Treasury market-and we haven't seen one in quite a while! Tech jitters are driving a flight to quality," wrote Mohamed El-Erian, chief economic adviser at Allianz on X.

Energy:

Oil regained momentum amid multiple attacks by Yemen's Houthi militants on Saudi Arabia's energy infrastructure.

Iran has threatened wider strikes not only on American bases and warships but on airports, pipelines and other civilian targets in the neighboring countries of the Persian Gulf, if the U.S. and Israel restart their air campaign.

"Continued targeting of Saudi infrastructure leaves the market exposed to further volatility, as any successful strike on major production facilities, pipelines or export terminals could materially tighten physical supply," said Thadeu Dos Santos, regional director at Infinox.

Metals:

Selling pressure on gold has eased, but buying interest remains insufficient to establish a new direction, XS.com's Linh Tran said.

"The market is finding a balance between demand for gold accumulation and pressure from high interest rates," the market analyst added. A higher interest-rate environment typically weighs on nonyielding assets like gold. Gold prices are likely to continue to consolidate in the near term, with the Fed's meeting next week and a U.S. inflation report expected to test this view, she said. Iron ore prices strengthened in Asian trading hours. Analysts remain concerned over steel demand, Baocheng Futures analysts said in a note.

The outlook for Chinese steel production might also limit gains, they added. Iron ore prices are likely to trade with a firmer bias in the near term, while remaining sensitive to shifts in demand expectations and broader market sentiment, they said.

TODAY'S TOP HEADLINES

Meta's Hunt for AI Capital Strikes a Raw Nerve on Wall Street

The vast amount of capital needed to fund the artificial-intelligence build-out is forcing tech giants to hunt for ever-larger sums of cash-and Wall Street is raising a bright red flag.

Signals from Meta Platforms that it could soon go on a cash-raising spree helped trigger another massive rotation trade on Thursday, with investors dumping stocks connected to the AI boom and piling into almost everything else, from U.S. Treasurys to the beaten-down shares of home builders and software companies.

Iran Threatens Wider Strikes on Economic and Civilian Targets if U.S. Attacks

Iran's message is stark: If the U.S. and Israel restart their air campaign, Tehran will respond with strikes not only on American bases and warships but on airports, pipelines and other civilian targets in the neighboring countries of the Persian Gulf.

The warnings, issued publicly and in private diplomatic communications, are clearly aimed at deterring any attack with tough talk. But they also signal a real threat. Iran retains significant missile and drone stocks and the ability to use them.

U.K. Consumer Confidence Suffers Biggest Drop Since Pandemic

Consumer sentiment in the U.K. tumbled at the fastest pace since the Covid-19 pandemic this month as mounting cost-of-living pressures reversed the bounce in optimism seen over the summer.

Research group GfK said its consumer-confidence barometer, published Friday with the Nuremberg Institute for Market Decisions, fell 11 points to minus 24 in October-the largest fall in sentiment since the onset of the pandemic in April 2020.

Trump Called Musk and Asked Him to Lift Ukraine Starlink Restrictions

WASHINGTON-President Trump called Elon Musk on Wednesday and asked him to lift restrictions on a military-grade version of Starlink in Ukraine that the SpaceX chief had throttled, U.S. officials said.

The system was working more normally Thursday, shortly after their conversation, U.S. and Ukrainian officials said. Some Ukrainian officials said the system wasn't restored to full functionality but was working at higher speeds than under the cap.

SK Hynix Pulls Plug on Memory-Chip Unit U.S. IPO on Market Jitters

SK Hynix halted plans to list its memory-chip unit in the U.S., becoming the latest casualty of market turmoil that is stalling a rush of multibillion-dollar fundraisings by companies tied to the artificial-intelligence boom.

The South Korean company-the world's second-largest memory chip maker-said Friday that its Solidigm subsidiary suspended a review exploring an initial public offering as an option to get funding for a new fabrication facility in the U.S.

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Expected Major Events for Friday 06:00/UK: Sep Retail sales

06:00/DEN: Oct Business tendency survey

06:00/DEN: Sep Retail Sales Index

07:15/FRA: Oct France Flash PMI

07:30/GER: Oct Germany Flash PMI

08:00/POL: Sep Unemployment

08:00/EU: Oct Eurozone Flash PMI

08:00/ICE: Sep PPI

08:30/UK: Oct Flash UK PMI

13:00/BEL: Oct Business Confidence Survey

15:59/UKR: Sep PPI

17:59/POR: Aug ICSG Copper Report

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(END) Dow Jones Newswires

October 23, 2026 00:20 ET (04:20 GMT)