Stock Market Update

U.S. equity futures remain modestly lower, with futures tied to the S&P 500 currently trading 11 points below fair value. 

Asian markets finished mostly lower on Tuesday, with renewed concerns surrounding AI spending and elevated borrowing costs weighing on technology shares and pushing several regional benchmarks sharply lower. Japan's Nikkei 225 fell 1.3% to a one-month low, with Fujikura (-7%), SoftBank Group (-6%), Taiyo Yuden (-5%), Kioxia Holdings (-3%), and Tokyo Electron (-3%) extending the recent weakness in AI-linked shares. South Korea's KOSPI plunged 3.7%, more than reversing Monday's rebound as Samsung Electronics (-3%) and SK Hynix (-5%) joined the semiconductor selloff, while steep declines in Hanwha Aerospace (-12%), HD Hyundai Heavy Industries (-9%), and Hyundai Motor (-5%) showed that selling extended well beyond technology. Hong Kong's Hang Seng dropped 1.3% following Monday's holiday, pressured by Lenovo (-10%), Z.AI (-6%), Pop Mart (-4%), SMIC (-2%), and Tencent (-2%). China's Shanghai Composite bucked the regional weakness with a 0.1% gain after the PBoC left its one-year and five-year loan prime rates unchanged at 3.00% and 3.50%, respectively, following stronger-than-expected third-quarter growth. South Korea's planned KRW800 trln investment in four semiconductor fabs and SK Hynix's KRW2 trln supplier financing program highlight continued efforts to expand domestic chipmaking capacity even as investors increasingly scrutinize the scale and prospective returns of AI-related investment.

• In economic data:
  • China's PBoC left its one-year Loan Prime Rate unchanged at 3.00%, in line with expectations, and maintained the five-year Loan Prime Rate at 3.50%, also as expected.

European markets trade broadly lower, with renewed selling in AI-related shares combining with rising oil prices and persistent political uncertainty to weigh on sentiment. Germany's DAX falls 0.8%, with Siemens (-4%), Infineon (-3%), Hochtief (-3%), and Siemens Energy (-3%) among the weakest performers, while September producer prices accelerated to 6.7% yr/yr, adding to concerns surrounding inflation and borrowing costs. France's CAC 40 declines 0.7%, with STMicroelectronics (-3%), Legrand (-4%), Safran (-2%), and Societe Generale (-1%) retreating as technology weakness combines with continued uncertainty surrounding social unrest in France. London's FTSE 100 falls 0.6%, with banks and defense shares under pressure despite data showing the U.K. unemployment rate unexpectedly declined to 4.7% and employment increased by 102,000 in the three months through August. Anglo American (+2%) bucks the weakness after raising its annual diamond production forecast, while Germany's economic outlook remains mixed as the ZEW current conditions gauge improves sharply but expectations deteriorate. The STOXX Europe 600 falls 0.6%, while Italy's FTSE MIB declines 0.8% and Spain's IBEX 35 loses 0.4%.

• In economic data:
  • U.K.'s August Unemployment Rate fell to 4.7% (expected 4.9%; prior 4.9%).
  • U.K.'s August Employment Change was +102K (expected +20K; prior +67K).
  • U.K.'s August Average Earnings including bonuses increased 3.7% yr/yr (expected 3.8%; prior 3.9%), while earnings excluding bonuses rose 3.7% (expected 3.6%; prior 3.6%).
  • U.K.'s September Claimant Count Change was +30.3K (expected +19.4K; prior +7.0K).
  • Germany's September PPI increased 1.9% m/m (expected 1.5%; prior 1.1%) and 6.7% yr/yr (expected 6.3%; prior 4.6%).
  • Germany's October ZEW Economic Sentiment fell to 28.1 (expected 30.2; prior 34.7), while Current Conditions improved to -35.9 (expected -45.0; prior -47.1).
  • Eurozone October ZEW Economic Sentiment fell to 18.5 (expected 23.6; prior 25.8).
  • Eurozone August Current Account totaled EUR8.7 bln (expected EUR29.2 bln; prior EUR27.2 bln).
  • Eurozone August Construction Output increased 1.85% m/m (prior 0.19%).