Morning Bid: Korean canary in the AI coalmine

European and global markets face a challenging start on Tuesday as investors grapple with the fallout from a rocky debut for a South Korean AI startup. AI infrastructure firm Elice Group experienced a sharp decline, falling nearly 30% below its initial public offering price, while the tech-heavy KOSPI gauge slipped about 4%, reflecting cautious investor sentiment following a market-wide selloff.

Major AI players, including Meta Platforms, are set to announce significant increases in capital expenditure, with combined spending projected to reach $1.2 trillion in the coming year. However, concerns have emerged over whether companies can justify the financing costs of such investments. Netflix is expected to report a slowdown in revenue growth for the third quarter, while SpaceX is forecast to generate $12.74 billion in quarterly revenue.

Established companies like General Motors, Hasbro, Halliburton, and 3M are also among those due to report on Tuesday. Oil prices have rebounded on Tuesday, amid uncertainty over whether U.S. President Donald Trump will lift sanctions on Russian energy exports, and Middle East unrest has raised concerns about potential supply disruptions.

Inflationary pressures from higher oil prices have led most major central banks to maintain a tightening bias, but policymakers are cautious about exacerbating economic strains through further interest rate hikes. Federal Reserve Chair Kevin Warsh has indicated a reluctance to raise rates again in the near future. ECB policymaker Martin Kocher and Finnish central bank governor Olli Rehn will deliver speeches later on Tuesday, while Bank of England Monetary Policy Committee member Megan Greene will present a speech at the London School of Economics.

Economic data releases to watch include U.S. housing starts and building permits figures, with the Census Bureau predicting September housing starts rose to 1.305 million from 1.275 million in August.