US tech stocks had slid in the previous session after a report that artificial intelligence company OpenAI had missed internal targets, raising broader concerns about the sustainability of the AI boom. The Iran war also weighed on sentiment as oil prices rose.
While stocks picked up during Asian trading overnight, European indexes were mostly lower at 1108 GMT, with the STOXX 600 down 0.3% and London’s FTSE 100 down 0.8%. Wall Street futures were a touch higher, with Nasdaq e-minis up 0.4% on the day, while Dow Jones and S&P futures were close to flat YMcv1, EScv1.
Earnings from Microsoft, Alphabet, Amazon and Meta are due later in the session.
Shaniel Ramjee, co-head of multi-asset investments at Pictet Asset Management, said investors would focus on capital expenditure plans from so-called hyperscalers, which operate vast data centres and AI infrastructure.
“What we saw yesterday, with OpenAI, was some questions regarding the targets, and potentially does that impact some of the spending. The market will be very carefully looking today at what the hyperscalers say about not only how much they want to spend, but where that money is coming from, how durable is that,” he said.
Oil prices rose, with Brent hitting a one-month high. Brent crude futures for June LCOc1 were last up 2.7% at US$114.29 a barrel, an eighth consecutive day of gains, while US West Texas Intermediate futures CLc1 were up 3.1% at US$103.06.
Analysts said the United Arab Emirates’ decision to quit OPEC was unlikely to have a major near-term impact on prices, though it would weaken the oil producers’ group. Russia said the move would boost output and lower prices over time.
Attacks on Gulf countries have subsided since a ceasefire on April 8.
Euro zone economic sentiment hit its lowest in three and a half years, data showed, as the Iran war hit the services sector and inflation continued to rise. Euro zone government bond yields were at their highest in weeks, as inflation worries persisted. The European Central Bank is expected to leave rates unchanged on Thursday.
In the UK, 10-year gilt yields were on track for their highest close since 2008, as inflation fears from rising oil prices pushed up borrowing costs globally, and concerns lingered about the prime minister’s future.
Investors were also awaiting the outcome of the Fed’s April meeting, which could be the last with Jerome Powell as head. Policymakers are expected to keep rates unchanged while assessing the economic impact of the Iran war.
“Inflation is going to be under scrutiny with it having this impact and to what extent the Fed wants to look through that energy price increase,” Pictet’s Ramjee said.
The dollar index was 0.1% higher at 98.697 =USD, while the euro was down 0.1% at US$1.1704. The dollar has acted as a safe-haven asset during the conflict, although it has fallen this month from its late-March peak.
US Treasury yields were little changed, with the 10-year yield at 4.3556%.
Gold prices were down 0.6% at US$4,567.14 an ounce, having hit their lowest since April 2 in the previous session.