Stocks fall, bonds gain as Meta dents tech optimism

Global stocks slipped on Thursday as tech earnings optimism proved short-lived, overshadowed by concerns over the outlook for artificial intelligence and a stalemate in the Gulf region that drove up oil prices. The MSCI's All-World index was on track for its biggest daily drop in two weeks, falling by 0.4%, as tech shares across Asia and Europe declined.

Meta, one of the pioneering AI hyperscalers, reported a third-quarter revenue that surpassed expectations, yet the company's announcement of a non-voting stock plan reignited doubts about its growing financial obligations. Market analysts noted the presence of conflicting factors in the current market landscape, which is still seeking a clear narrative.

Ben Laidler, Bradesco BBI's head of macro and equity strategy, highlighted the uncertainty surrounding the AI-driven earnings narrative, which has previously bolstered US equities and extended to global markets. Meanwhile, Meta faced a legal setback when a New Mexico judge ordered the company to pay a $25 billion penalty over a data privacy case.

In Europe, the STOXX 600 index fell by 1%, primarily due to losses in tech-linked stocks like ASML, Schneider Electric, and Siemens Energy. US stock futures indicated a potential decline at the opening bell, with declines ranging from 1% to 2%. Shares in Meta plummeted by approximately 0.8%, while Tesla, which also released earnings and revised its spending outlook ahead of a potential merger with SpaceX, saw its stock drop nearly 5% in premarket trading.

Geopolitical tensions in the oil markets contributed to the decline, with Brent crude prices surging 3% to $112 a barrel, nearing a five-month high. The spike was attributed to additional Houthi attacks in Saudi Arabia, which raised concerns about potential escalation and supply disruptions in the Middle East. Oil price volatility created enough uncertainty to counter the growing optimism about a possible inflation-driven shift towards government bonds, which drove US Treasury yields down by the most in a week.

The 10-year note fell by 7 basis points to 5.075%, marking the first time it was lower than French government bonds in 13 years. The euro, which has depreciated by 0.8% this month, remained stable at around $1.1241, while the dollar index declined by 0.1%. Meanwhile, the yen gained safe-haven demand, causing the US dollar to drop by 0.7% to 157.1.

The Korean won held steady at 1,324, as the Bank of Korea kept its benchmark interest rate unchanged at 3.00%. Gold experienced a modest decline of 1.2% to $4,090 an ounce, and both Bitcoin and Ether lost 3%, trading at $82,000 and $2,412, respectively.