GLOBAL MARKETS-Asian shares wobble as Alphabet earnings miss drags Wall St futures lower

Shares traded erratically in Asia on Thursday as AI-related earnings ‌announcements ​prompted wildly mixed responses, raising the stakes for Amazon and Intel results due later in the day. Hefty cash burn from Alphabet sent its shares 10% lower in after-hours trading, wiping nearly $400 billion off its market value. That drove Nasdaq futures 0.9% lower. Microsoft, by contrast, beat forecasts with better-than-expected cash flows that lifted its ‌shares by 3%.

European bourses are set for a calmer open, with pan-region stock futures up 0.2%. Oil prices retreated as investors latched onto hopes that peace talks to resolve the Middle East conflict could be back on the table. Overnight, the Federal Reserve held interest rates steady as widely expected, but two committee members voted for a hike. Chair Kevin Warsh struck a more confident note on the inflation outlook during his press conference, sparking ‌a rally in Treasuries.

However, the bigger test came from earnings. Samsung Electronics reported another set of record earnings thanks to booming demand for its memory chips, but it was silent on plans to boost returns, which ‌sent its shares down 4%. That weighed on the broader KOSPI index, which fell 1.2% after a nearly 7% surge a day earlier on plans from SK Hynix to return about $75 billion to shareholders this year after record profit. SK Hynix rose 4.6% after jumping 11% a day earlier.

MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.7%, while Japan's Nikkei fluctuated between gains and losses and was last up 1%. China's blue-chip index fell 0.8% and Hong Kong's Hang Seng index rose 0.5%.

"The reason why Alphabet is down ⁠is because their traditional ​revenue service of ad generation has been impacted by the ⁠very thing which is the AI boom. So it's causing a mix of results for Google," said Jamie Hannah, deputy head of investments at VanEck. "Both Alphabet and Microsoft confirmed that the AI revenue generation is still solid. We saw that through the ⁠data centre growth, the cloud services. So that part of the business is solid, which then flows into a lot of the information coming out of Asia with SK Hynix yesterday as well in Korea."

CENTRAL BANK FEST CONTINUES After the Fed held ​interest rates steady, all eyes are on US personal consumption expenditures data for September, the Fed's preferred gauge of inflation, and US Q3 GDP data. Forecasts are centred on a 0.3% monthly ⁠rise in the core measure of PCE inflation, picking up from a 0.2% gain the previous month.

Markets are still 80% priced for a rate rise in December despite dovish comments from Warsh, which led to a steepening of the Treasury yield curve. The 2-year Treasury ⁠yield fell ​about 5 basis points overnight and was last at 4.6871%. "The dissenting votes to hike rates at today’s meeting could be interpreted as being not about whether the Fed hikes again, but when," said Kerry Craig, global market strategist at J.P. Morgan Asset Management.

"With policy tightening already being priced in, this implies that yields will remain range-bound unless there is a clearer signal for more aggressive policy tightening or a ⁠pivot to cuts," he said. The Bank of Canada hiked interest rates on Wednesday for the first time in more than three years and warned of further increases. The European Central Bank is, however, expected to hold ⁠interest rates steady later on Thursday.

In the currency markets, ⁠the dollar was steady against its major peers at 102.23 after a 0.2% dip overnight. The kiwi slipped another 0.2% to $0.5615, having tumbled 1% overnight after its central bank shocked markets by leaving interest rates steady on Wednesday. Brent crude futures fell 1.2% on Thursday to $113.91 a barrel after the Wall Street Journal reported US ‌Vice President JD Vance sent a ‌letter to Iranian Security Council chief Mohsen Rezaei in an effort to revive peace negotiations.