Global stocks fall, bonds gain as Meta dents tech optimism

Global stocks experienced a decline on Thursday, while bonds gained as optimism surrounding tech companies was dampened. The MSCI's All-World index was on track for its largest one-day decline in two weeks, falling by 0.4%. Tech shares from various regions, including Seoul, Tokyo, Amsterdam, and Paris, suffered significant losses.

Meta, the first of the AI hyperscalers to release quarterly results, reported revenue that surpassed analyst expectations. However, the excitement was short-lived as the company announced a plan to issue non-voting stock, reigniting concerns over its growing financial obligations. Experts noted the presence of multiple factors influencing the markets, with a major worry being the potential challenge to the AI-driven earnings narrative that had previously bolstered US equity performance.

Meta also faced a legal setback overnight, when a New Mexico judge ordered the company to pay a $25 billion penalty to the state in a data privacy case. European tech-related stocks, such as ASML, Schneider Electric, and Siemens Energy, weighed down the STOXX 600, which fell by 1%. US stock futures initially dropped between 1% and 2%, suggesting a similar pattern at the opening bell.

Meta's shares experienced a 0.8% decline, while Tesla, which also reported earnings and reduced its spending forecast ahead of a potential merger with SpaceX, saw a nearly 5% drop in premarket trading. Geopolitical tensions played a role in the oil market, with Brent crude prices rising by 3% to $112 a barrel due to additional Houthi attacks in Saudi Arabia, raising concerns about potential conflicts and supply disruptions in the Middle East.

Nervousness over the global economy's vulnerability helped offset concerns about rising inflation driving investment into government bonds, causing US Treasury yields to decline for the seventh consecutive week. The 10-year note dipped 7 basis points to 5.075%, marking its lowest level relative to French government bonds in 13 years.

French bonds faced significant pressure this month, pushing yields above 5% for the first time in 13 years, as investors sought indications that the government could address social unrest and curb spending. The euro remained stable, trading near $1.1241, while the dollar index declined by 0.1%. The yen attracted safe-haven demand, pushing the dollar down by 0.7% to 157.1, following a statement from Deputy Bank of Japan Governor Ryozo Himino indicating his willingness to increase borrowing costs.

The Korean won exhibited minimal movement, settling at 1,324, as the Bank of Korea kept its benchmark interest rate unchanged at 3.00%. Gold underperformed as a safe-haven asset, falling by 1.2% to $4,090 an ounce, while cryptocurrencies saw a 3% drop, with Bitcoin and Ether trading at $82,000 and $2,412, respectively.