Equities: Global stocks face selling pressure as tech earnings approach - Deutsche Bank

Pressure on global equities reflects AI-driven weakness in US technology shares and wider credit spreads at selected firms, Deutsche Bank strategists note. Losses extended to European markets, whereas Asian indices were mixed. Attention is shifting to earnings from Alphabet, Microsoft and Amazon, whose capital expenditure plans could carry as much weight for markets as the FOMC decision.

Can global equities withstand AI concerns as megacap earnings approach?

"As that was happening, several AI names remained under pressure last week, with the Philly semiconductor index losing ground for a third consecutive week, falling -3.21% (+0.44% Friday). And, in turn, losses for chip stocks dragged down US equities more broadly, with the NASDAQ down -0.71% (-0.21% Friday), whilst the S&P 500 fell -0.47% (-0.52% Friday)."

"The individual decliners included CoreWeave, which fell -11.65% (-2.46% Friday), and whose 5yr CDS rose another +19bps last week to 1146bps. Meanwhile, Meta’s share price fell -9.40% last week (-0.96% Friday) following its earnings, and its 5yr CDS rose +22bps to 127bps. "

"Other assets struggled as well, with both the CAC 40 (-2.19%) and the STOXX Banks (-5.10%) falling to their lowest level since March and June, respectively, although the STOXX 600 saw a comparatively smaller decline of -1.39% (-0.31% Friday)."

"In Asia, the KOSPI (-0.90%) is leading declines as weakness in technology shares weighs on sentiment. Elsewhere, the Nikkei (-0.34%), CSI 300 (-0.47%), and Shanghai Composite (-0.09%) are also trading moderately lower. In contrast, the Hang Seng (+0.51%) and S&P/ASX 200 (+0.17%) are outperforming and bucking the broader regional trend. S&P 500 (+0.20%) and Nasdaq (+0.24%) futures are higher."

"Alphabet and Microsoft report on Wednesday, with Amazon following on Thursday, so the market’s reaction to their results and, especially, the latest capex plans could rival Wednesday’s FOMC for top billing."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Learn more.)