Market Overview
European markets are set to open higher today, benefiting from a trifecta of positive developments: easing concerns over AI sector revenue, a retreat in oil prices, and declining US Treasury yields. While parts of the Asian session experienced mixed performance, particularly for chipmakers impacted by earlier reports on OpenAI’s revenue outlook, a more optimistic view for OpenAI’s year-end revenue, coupled with de-escalating geopolitical tensions regarding oil supply and strong demand for US long-dated debt, has bolstered overall risk sentiment heading into the European trading day.
Markets
Australia’s ASX 200 (^AXJO) defied earlier tech weakness, closing the day at 8,716.60, up 0.64%, and gaining 0.40% for the week. Asian equities saw varied performance; Japan’s Nikkei 225 (^N225) closed marginally lower at 69,031.04, down 0.02%, while Hong Kong’s Hang Seng Index (^HSI) posted a significant gain, standing at 24,191.97, up 1.71% in active trading.
In commodity markets, oil prices softened as geopolitical tensions eased. Brent Crude (BZ=F) traded at 103.41, down 0.83%, and WTI Crude (CL=F) traded at 90.81, down 0.74%. Gold advanced, with Gold (GC=F) trading at 4,217.30, up 1.45%.
US Treasury yields declined across the board. The 10-year Treasury yield (^TNX) traded at 5.231%, down 4.60 bp, while the 30-year Treasury yield (^TYX) traded at 5.606%, down 5.50 bp. US stock futures edged higher in pre-market trading, with S&P 500 futures up 0.3%, Nasdaq 100 futures adding 0.49%, and Dow Jones Industrial Average futures advancing 0.2%.
What Drove Markets
The day’s market movements were largely influenced by shifting narratives around the AI sector, a de-escalation in geopolitical tensions, and stabilizing US bond markets.
Initially, “AI jitters” affected Wall Street and parts of Asia following reports that OpenAI’s revenue was below earlier indications. These jitters had led to the Nasdaq Composite dropping more than 1% and the S&P 500 seeing a 0.5% loss on Wall Street on Thursday. CNBC confirmed that OpenAI informed investors it had reached $50 billion in annualised revenue at the end of September, approximately $20 billion below previously reported levels. However, CNBC noted that an earlier $68 billion figure included gross revenue from partners, potentially explaining part of the discrepancy. Sentiment subsequently improved following reports that OpenAI expected annualised revenue to reach or exceed $70 billion by year-end, easing concerns about its ability to sustain substantial investment in AI chips and data-centre infrastructure. Technology stocks experienced volatility amid the evolving reports about OpenAI’s revenue outlook.
Oil prices retreated after US President Donald Trump stated that the US would not attack Iran at any time prior to the Midterm Elections and was engaged in productive discussions with Iran. This statement helped calm market nerves regarding potential disruptions to Middle East oil supplies.
In the US bond market, strong demand at an auction of 30-year Treasury debt contributed to a decline in long-dated yields, offering some relief to equity markets. The 10-year Treasury yield eased after rising to a 24-year high earlier in the week, also offering some relief to equities. This occurred despite lingering concerns over persistent inflation and elevated government borrowing, with US Treasury yields still near “multi-decade highs.” Swiss private bank UBP raised its estimated fair-value range for the 10-year Treasury yield to 4.75%–5.25% in its October outlook, citing renewed inflationary pressures, and expects Federal Reserve rate cuts are unlikely before the second half of 2027.
APAC markets showed divergent performance. The Australian sharemarket rallied, with its tech sector notably defying the falls seen in US tech stocks. In contrast, some major Asian markets, including Japan, saw declines while China’s Shanghai Composite saw a gain. Hong Kong, however, posted gains. South Korean and Taiwanese markets were closed for holidays.
Stocks to Watch
Several individual stocks reacted to the shifting market dynamics. Firmus pulled its much-anticipated ASX float, which Investing.com reported was a roughly $5 billion initial public offering, citing market volatility and opting for private fundraising instead. In corporate news, Maas Group, which holds a 3.2% stake in Firmus, halted trading before closing 5.9% lower at $4.67 after recommencing trading. Maas Group has stated it will complete Firmus work orders by the end of 2027. In Australia, Telstra (TLS.AX) fell 1.85%, dragging down the communication services sector following news of SpaceX’s major spectrum deal. Conversely, Wesfarmers (WES.AX) gained 1.72%, joining other consumer discretionary stocks that rallied. Additionally, BHP Group slipped 0.41%.
In the US, the AI-related data center company CoreWeave (CRWV) fell sharply, down 7.77%, as initial concerns over OpenAI’s revenue outlook impacted high-flying artificial intelligence names. Oracle (ORCL) lost 5.48%, Intel (INTC) tumbled 5.34%, AMD (AMD) slid 3.90%, NVIDIA (NVDA) shed 2.94%, and Broadcom (AVGO) dropped 4.35%, all suffering as chip and AI-related stocks bore the brunt of declines. In Japan, SoftBank Group (9984.T), a major investor in OpenAI, dropped 3.59% following reports questioning OpenAI’s revenue sustainability.
SpaceX (SPCX) declined 4.19% for the day, despite CNBC reporting its shares rose 2% in extended trading following its major spectrum deal, which also caused US telco stocks, including Australia’s Telstra, to suffer. T-Mobile (TMUS) gained 2.18%, despite CNBC noting investor worries that SpaceX’s spectrum deal could drive up competition.