Market wrap: Oil prices subside, stocks mixed amid AI concerns

Asian stocks headed into the weekend on a mixed note on Friday, with tech weighed by renewed concerns about the AI investment boom, while support came from a drop in oil prices after Donald Trump ruled out a pre-election strike on Iran.

Traders took a little heart from a dip in oil prices after US President Donald Trump ruled out hitting Iran before the midterm elections, saying Washington was holding “productive discussions” with Tehran.

His remarks came after reports said the White House had asked the Pentagon to draw up plans for a possible attack ahead of the November 3 vote, hoping a show of strength might help struggling Republicans’ chances.

Both main contracts were down around 0.7 percent Friday, with Brent crude at $103.53, though that is after they rose as much as four percent on concerns about increased Iranian strikes in the Strait of Hormuz.

Fresh boost for tech sector

The outlook for artificial intelligence has provided a fresh boost to the tech sector in recent weeks, with some optimism for the upcoming earnings season. Chip titan Nvidia this week hit a record high and closed in on the $6 trillion market capitalisation.

That was dealt a blow by a Financial Times report saying OpenAI, the maker of ChatGPT, expected to make $50 billion in annualised revenue this year, far less than the $70 billion flagged previously.

“For most of this boom, the market has been happy to follow the money going in. Bigger data centres, more GPUs, more memory, more power, more debt, more capex,” wrote Stephen Innes at SPI Asset Management.

“Every fresh spending commitment became another brick in the bullish wall because the assumption underneath it was simple enough: if the industry is prepared to spend this much, the demand will eventually justify it.

“Then OpenAI handed the market a number that made traders look at the other side of the ledger.”

Wall Street’s Nasdaq ended more than one percent lower, with Nvidia down nearly three percent, while Microsoft, AMD and Amazon among others sharply lower.

However, Chris Weston at Pepperstone added that “the discrepancy may reflect differences in revenue measurement rather than an outright deterioration in OpenAI’s underlying business”.

Still, he said, “in a market where valuations are increasingly dependent on ambitious revenue and cash flow projections, the headlines have been enough to trigger a meaningful one-day repositioning”.

Asian stocks down

In Asia, Tokyo sank with tech investing titan SoftBank losing more than four percent, while Kioxia and Advantest were also well down.

Shanghai and Singapore were also down, though Hong Kong, Sydney, Wellington, Manila and Jakarta were all up.

Seoul and Taipei – both heavily weighted with tech firms — were closed for holidays.

Key figures at around 4:30 (SA time)

• Tokyo – Nikkei 225: DOWN 0.8 percent at 68,512.30 (break)
• Hong Kong – Hang Seng Index: UP 1.2 percent at 24,059.76
• Shanghai – Composite: DOWN 1.2 percent at 3,767.83
• West Texas Intermediate: DOWN 0.7 percent at $90.89 per barrel
• Brent North Sea Crude: DOWN 0.7 percent at $103.53 per barrel
• Euro/dollar: UP at $1.1222 from $1.1213 on Thursday
• Pound/dollar: UP at $1.3241 from $1.3228
• Dollar/yen: DOWN at 157.89 yen from 157.92 yen
• Euro/pound: DOWN at 84.75 pence from 84.77 pence
• New York – Dow: UP 0.1 percent at 51,231.64 (close)
• London – FTSE 100: DOWN 0.2 percent at 10,441.60 (close)