AI spending concerns weigh on tech as markets turn to the ECB

Frank Walbaum

Important news this week

Thu, 29th, 14:45 CET EU Interest Rate Decision.
Fri, 30th, tentative JP Interest Rate Decision.

AI spending concerns weigh on tech as markets turn to the ECB

Concerns over the cost of artificial intelligence investment continue to weigh on technology stocks, despite positive earnings from Microsoft. Investors remain focused on whether the enormous spending required to build AI infrastructure will generate sufficient returns, while Google's weakness highlights growing concerns about capital expenditure and pressure on future cash flow. The Federal Reserve kept interest rates unchanged and maintained a cautious, data-dependent stance. The US Dollar initially strengthened after the decision but subsequently gave back gains. Attention now shifts to the European Central Bank: a steady policy stance could leave EURUSD looking for direction, while any change in the ECB's tone on inflation and growth could determine whether the Euro regains momentum.

Market talk

Gold remains under pressure but is still trading above the important $4,000 support zone. Silver has turned lower again, raising questions about whether concerns over economic growth and industrial demand are weighing on the metal. A stronger US Dollar or a reassessment of interest-rate expectations could add further pressure, while a sustained recovery in risk appetite might help stabilise prices. For now, the ability of gold to hold its key support will be an important technical signal.
The Japanese Yen has strengthened slightly against other currencies, suggesting that demand for the currency is recovering after recent weakness. Meanwhile, investors are reassessing the outlook for global growth, corporate profitability and the sustainability of AI-related investment. These concerns could keep equity markets volatile even when individual earnings reports are positive. With the ECB now in focus, markets will be watching for fresh guidance on the balance between inflation risks and slowing growth. The Euro's reaction may depend less on the decision itself than on how the central bank frames the path ahead.

Tendencies in the markets

Equities correct, USD weaker, crypto weak, oil stable, metals weaker, JPY stronger.

Author

Frank Walbaum

AUD/USD edges higher above 0.7050 as hot CPI lifts RBA rate hike odds

The AUD/USD pair gathers strength to near 0.7055 during the Asian trading hours on Thursday. The Australian Dollar edges higher against the US Dollar as hotter inflation data bolsters expectations of Reserve Bank of Australia rate hikes. The US September Personal Consumption Expenditures inflation report will be in the spotlight later on Thursday.

USD/JPY retakes 158.00 as USD stalls the post-FOMC corrective slide

USD/JPY attracts some dip-buyers during the Asian session on Thursday, climbing back above 158.00 as the US Dollar reverses part of the post-FOMC pullback from a two-week high. Bulls, however, await key US macro data – the Advance Q3 GDP and the PCE Price Index – before positioning for further gains. Focus will then shift to the crucial BoJ policy update on Friday amid firming expectations for a December rate hike.

Gold weakens further below $4,050 amid Fed rate hike bets and Iran risks

Gold sticks to intraday losses below the $4,050 level heading into the European session ,and for now seems to have snapped a three-day winning streak to the weekly top set the previous day. The US Dollar attracts fresh buyers after Wednesday's post-FOMC corrective slide from a two-week high and is seen as a key factor weighing on the precious metal.

Pi Network risks another lower leg as the broader crypto market slips

Pi Network is trading in the red on Thursday, retreating toward a near-term support around $0.0740. The Fear and Greed Index declines to 43 on Thursday, while total liquidations exceed $350 million over the last 24 hours, suggesting a deterioration in investors' risk appetite and a sell-side bias. The technical outlook for PI is bearish, with selling pressure building.

European Central Bank is expected to hold interest rates despite high inflation pressures

The European Central Bank concludes its two-day monetary policy meeting on Thursday and will announce its decision at 13:15 GMT. The bank is widely expected to leave the interest rate on the Main Refinancing Operations and the Deposit Facility unchanged at 2.65% and 2.50%, respectively, after having raised both of them by 25 basis points in September.

Anthropic pledged $270 billion to Amazon, Google, and Microsoft. Here's who actually gets paid

Anthropic owes Amazon, Google, and Microsoft at least $269.4 billion for computing power, even if it uses less. All three sell its models and handle its billing, and Amazon and Google own stakes and lend it money, so they get paid regardless of how the IPO goes. The Dario Amodei-led Anthropic filed its initial public offering (IPO) on Monday, seeking a listing on the Nasdaq under the ticker ANT.