GLOBAL MARKETS-Stocks fall as Meta dents AI optimism; French bonds under fire

Global ‌stocks ​retreated on Thursday, as tech earnings could not offset nagging concern over the outlook for AI, while a stalemate in the Gulf pushed up oil prices and investors took aim again at French markets. MSCI's All-World index was set for its largest ‌daily fall in two weeks, down 0.4%, as tech shares from Seoul and Tokyo to Amsterdam and Paris tumbled.

Meta, the first of the so-called AI hyperscalers to publish quarterly results, reported third-quarter revenue late on Wednesday that beat expectations. But any optimism was short-lived, after the company unveiled a plan to issue non-voting stock that revived concern over its mounting ‌capital commitments. "There are lots of crosscurrents in markets at the moment, which are grappling for a narrative right now," Ben Laidler, head of macro and equity strategy ‌at Bradesco BBI, said.

"The big concern is that AI-driven earnings narrative, which has supported US earnings and spread to global equities, may be challenged here." Meta also suffered a legal blow overnight, after a judge in New Mexico ordered the company to pay a $25 billion penalty to the state in a data privacy case.

In Europe, the STOXX 600 fell 0.7%, weighed down by tech-related stocks such as ASML, Schneider Electric and ⁠Siemens Energy. ​US stock futures fell between 1% and 1.7%, ⁠suggesting a drop at the opening bell later. Shares in Meta fell around 3% and those in Tesla, which also reported earnings and cut its spending forecast ahead of a possible merger with SpaceX, dropped nearly ⁠4% in the premarket.

Geopolitical concerns played out in oil markets, where Brent crude rose nearly 3% to $112 a barrel, near a five-month high, after more Houthi attacks in Saudi Arabia raised the ​risk of wider conflict and supply disruptions in the Middle East. There was enough nervousness about the possible damage to the global economy to offset concern about ⁠a sustained pickup in inflation to drive flows into government bonds, which pushed US Treasury yields down by the most in a week. The 10-year note was last 10 basis points lower at 5.05%, trading below that ⁠of ​France for the first time in 13 years.

French government bonds have been battered this month, driving yields above 5% for the first time since 2002, as investors looked for signs the government can contain social unrest and bring spending under control. French 10-year yields rose 11 bps to 5.107%, headed for their largest weekly rise since ⁠May. The euro, which has been dragged 0.8% lower this month, was steady on Thursday, falling 0.3% to $1.12, leaving the dollar index, which tracks the US currency against ⁠a basket of six others, up 0.1%.

The yen ⁠drew safe-haven demand, leaving the dollar down 0.7% on the day at 157.1, after Deputy Bank of Japan Governor Ryozo Himino signalled his readiness to raise borrowing costs. Gold missed out on safe-haven flows, dropping 1.8% to $4,070 an ounce, while in cryptocurrencies, bitcoin ‌and ether both lost 3.5% ‌to trade at $81,837 and $2,405, respectively.

(Additional reporting by Jiaxing Li in Hong Kong; Editing by Kate Mayberry, ​Shri Navaratnam, Susan Fenton, Elaine Hardcastle)