GLOBAL MARKETS: Rout in global tech shares eased but oil at five-month high

LONDON - The rout in global tech shares eased on Friday after fears over the vast funding needs of AI hammered Wall Street and triggered the biggest rally in US Treasuries in more than three years.

Asia's bourses steadied overnight and, though Europe .FTEU3 was 0.5% lower ahead of Wall Street'sopen, there was some respite from the pressureon French government bondsDE10FR10=RR, where widening spreads had drawn comparisons with the euro zone debt crisis.

Oil, however, showed no signs of easing, withBrent at a new five-month peak of $115 a barrel O/R after Houthi attacks on Saudi Arabia and reports that the US and Israel had drawn up plans for renewed strikes on Iran after the US midterm elections.

European natural gas prices jumped another 4% TRNLTTFMc1tooto leave them almost 30% higher so far this month.

"It's certainly a nervy market," said Societe Generale's Global Head of Currency Strategy, Kit Juckes.

"The oil price is just grinding higher... and we've got an inevitable correction in tech after its huge run-up, so it's actually hard to see why the dollar isn't higher."

The US currency was 0.2% .DXYstronger on the day against its main basket of other top currencies, but it remains flat for the week. /FRX

The euro EUR= meanwhile was headed for a moderate weekly loss, which was not a big move, Soc Gen's Juckes added, given all the bond market risk. The yen JPY= was on track for its biggest weekly rise in over a month after attracting safe-haven demand.

FOCUS ON THE FUTURES

For the jittery Wall Street bulls, Nasdaq futures NQc1 were off 0.5%, while S&P 500 futures ESc1 slipped 0.25% after the Nasdaq's 2.6% tumble on Thursday, its biggest slump since June. .N

Telecoms stocks were the latest casualties after a report that Elon Musk's SpaceX SPCX.O was in talks to launch a nationwide cellphone carrier, sending AT&T T.N, Verizon <VZ.N and T-Mobile TMUS.O down more than 4% in premarket trading.

Thursday's rout had seen the Philadelphia SE Semiconductor Index .SOX, whose firms are at the centre of the AI boom, plunge almost 7%. The likes of Meta dropped nearly 8%, whilst CoreWeave’s share price slumped 10% amid concerns about its debt burden.

Back in the bond markets, US Treasury yields were ticking up again, but were still just about under the key 5% level after Thursday's run for safety had fuelled their biggest one-day drop since March 2023. /US

Markets have also started paring back bets on global interest rate hikes. Almost a full quarter-point US Fed rate hike for next year has been stripped out this week amid the concerns over AI.

A December Fed hike is no longer fully priced either, with the implied probability falling to 85% 0#USDIRPR. In Europe too, the chance of an ECB December hike is down to 69% from 90% earlier in the week, Deutsche Bank's Jim Reid pointed out.

French yields FR10YT=RR, which were down 4 basis points at 5.05%, have risen nearly 27 bps this week, the most of any major euro zone country and the most in a week since late May.

The premium investors demand to hold French government debt over safe-haven German Bunds, dubbed 'le spread', remained above 170 after reaching its widest since the euro zone debt crisis, amid concerns over France's finances and political uncertainty.

AI RALLY RUNS AGROUND

In Asia, Japan's Nikkei .N225 dipped 0.3% to end its week down over 4%, while South Korea's KOSPI .KS11 ended its session higher but after shedding as much as 4% early on. .T

Mainland China's blue chips found support after hitting their lowest since July 2025, with the CSI300 .CSI300 closing the day up 1.7%. Hong Kong's Hang Seng .HSI also rose 0.7% after dropping 3% on Thursday.

"It is hard to get too bearish on equities overall just yet, with earnings growth still positive and the hard economic data holding up well," said Diana Mousina, deputy chief economist at AMP.

"All of this means that the AI trade isn’t necessarily over, but it is changing. It is no longer a case of 'buy everything'."

Gold XAU= failed to catch any safe-haven demand and was flat at $4,027 an ounce in London after a near 3% drop on Thursday that leaves it down just over 3% for the week. GOL/

-Additional reporting: Stella Qiu in Sydney;Editing by Elaine Hardcastle