About $500 billion was erased from Alphabet’s market value as mounting concern over artificial intelligence spending drove a global stock sell-off on Friday. Shares in Google’s parent fell 12.6% on Wall Street, then slipped further after hours, after investment in AI infrastructure left its cash flow below zero.
Investors focus on what AI spending will earn
The pressure reached other major technology businesses, with Intel falling 23% in after-hours trading and Amazon losing 7%. Financial results sharpened questions about whether the money committed to data centres and computing infrastructure would produce adequate returns.
Pepperstone analyst Chris Weston said investors’ concern centred on the rewards shareholders could expect from AI investment, rather than companies’ ability to fund it. Investors also worried that competition to build infrastructure could increase industry costs, making smartphones and personal computers more expensive and weakening demand.
Stock market losses spread across regions
Futures pointed to further weakness, while Asian exchanges recorded substantial declines. Chinese shares also faced pressure from concerns that softer demand for semiconductors and data centre equipment could hurt company earnings.
- Nasdaq 100 futures fell 1.9%, while European stock futures declined 0.5%.
- South Korea’s KOSPI dropped more than 3%, taking its October decline to almost 16%.
- Japan’s Nikkei lost more than 2% and was approaching a monthly decline of roughly 5%.
- China’s CSI300 was heading for its largest monthly fall in a decade.
Government debt attracts buyers
Investors moved towards US government bonds as they cut exposure to riskier investments. During Tokyo trading, the benchmark 10-year Treasury yield dropped more than seven basis points to 4.91%, bringing its October decline to about 37 basis points—the biggest monthly decrease since December 2023.
The two-year Treasury yield fell more than eight basis points to 4.57%. Because bond prices rise when yields fall, the moves signalled stronger demand for government debt.
Futures trading also suggested reduced expectations for additional US interest rate increases. The Federal Reserve had kept rates unchanged on Wednesday without giving a clear signal about the timing of another rise.
Currencies and Japan’s policy decision
The yen strengthened modestly to 157.20 against the dollar, while the Swiss franc traded near a one-month high at 0.8213 per dollar. The euro gained 0.1% to $1.1194, though it remained headed for a monthly loss exceeding 1%, its second successive monthly decline.
The Bank of Japan left its benchmark rate unchanged but said it would speed up sales of exchange-traded funds next year, weighing on Nikkei futures. Its continued attention to inflation risks also increased expectations of another rate rise as early as December.
David Chao, Invesco’s Asia-Pacific global market strategist, said faster asset sales could unsettle markets initially while also signalling the central bank’s confidence in Japan’s economy and financial conditions.
Cryptocurrency breach and oil supply concerns add pressure
A reported $6.3 billion security breach at Binance added uncertainty, prompting sales of digital assets and cryptocurrency-related shares. Bitcoin touched a six-week low before recovering partially to trade at $78,171.16, down 0.9%.
Standard Chartered’s head of digital assets research, Geoffrey Kendrick, said pressure could persist until details of the breach and the position of frozen assets became clearer.
Oil moved higher on Friday and was heading for a fourth straight monthly gain. An attack on a tanker in the Strait of Hormuz revived fears about energy supply disruptions during the continuing US-Israeli conflict with Iran.
