Morning Wrap: Weaker Sentiment for AI and Geopolitical Tensions Weigh on Markets

🏛️ Stock Market

• The Thursday session on US stock exchanges ended with a majority of gains, although their source this time was not technology companies.

• The Dow Jones index rose by 1.73 percent, and the S&P 500 gained 0.41 percent, while the Nasdaq lost value slightly.

• Investors shifted capital from the technology sector to companies in the financial, insurance, and retail sectors.

• The largest declines were recorded by Broadcom following the publication of weaker revenue results, and CrowdStrike shares fell after presenting disappointing forecasts.

• Arm Holdings and Micron Technology were also losing ground significantly.

• The session showed growing capital rotation toward more traditional sectors of the economy at the expense of technology firms, which had been driving gains on Wall Street in recent months.

• Negative sentiment dominates Asian equity markets on Friday, and the majority of major indices are recording declines.

• The deepest sell-off is observed in South Korea, where the KOSPI index is losing over 4 percent. Japan's Nikkei 225 (-1.03 percent), Hong Kong's Hang Seng (-0.87 percent), and Australia's S&P/ASX 200 (-0.69 percent) are also clearly below the line.

• The source of weakness is primarily the deterioration of sentiment around companies related to artificial intelligence and semiconductors.

• Asian investors were disappointed by the results and outlook of American Broadcom, whose shares fell by more than 12 percent, triggering a wave of sell-offs across the entire technology sector.

• Korean and Japanese chip companies suffered particularly heavily, having been the main beneficiaries of the global AI boom in recent months.

🌍 Geopolitics and Macroeconomics

• Thursday reports from the Middle East brought mixed signals regarding the prospects for ending the conflict.

• President Donald Trump announced that the United States is in the final stages of negotiations with Iran and is close to reaching an agreement that could lead to an end to the war. This information was perceived by the markets as a potential step toward de-escalating tensions in the region.

• At the same time, the situation remains very tense – Iran warned that in the event of a failure of the talks, it is ready to take action aimed at US military bases in the Middle East, and may also use its control over the Strait of Hormuz as a means of pressure.

• The issue of security for this strategic oil transport route remains one of the key topics of the negotiations.

• An additional challenge to the peace process is the position of Hezbollah – the organization's leader emphasized that only a full ceasefire and the complete withdrawal of Israeli troops from Lebanon will be acceptable.

• Such a tough stance shows that despite the declared progress in talks between the US and Iran, achieving a broader and lasting agreement in the region still remains a difficult task.

• On Thursday, signals appeared suggesting the possibility of resuming peace talks between Russia and Ukraine.

• Vladimir Putin declared readiness to reach an agreement through peaceful means, emphasizing that Russia remains open to negotiations aimed at ending the ongoing conflict. At the same time, he noted that any agreement must take into account Russian security interests and the realities created as a result of the war.

• The President of Ukraine, Volodymyr Zelensky, responded to the Kremlin's declarations, calling on Russia to end hostilities and begin concrete steps leading to peace.

• The Ukrainian leader emphasized that further prolonging the conflict does not serve either side and appealed for a transition from declarations to real actions. According to Kyiv, the fundamental condition for a lasting agreement remains respect for the sovereignty and territorial integrity of Ukraine.

• Although the statements of both leaders can be seen as a cautious signal of readiness for dialogue, there are still no signs of a breakthrough on the most important contentious issues. Both Moscow and Kyiv maintain their key positions, which means that the prospect of a swift end to the war remains limited.

💻 Technology Market

• Reports emerged in the technology market that representatives of the US administration held preliminary talks on the possibility of the government taking equity stakes in the largest American companies developing artificial intelligence.

• According to media information, the discussions were to concern the voluntary transfer of a portion of shares to the state, and the profits from such investments could be allocated for public purposes, including potentially for payouts to citizens.

🛢️ Commodities and Raw Materials

• Friday events in the Middle East once again increased concerns over the security of oil supplies.

• In Oman, crude loading was halted at the key export terminal of Mina al Fahal following an explosion near the transshipment berths. According to reports, the incident could be linked to a drone attack, although the details of the event have not been officially confirmed.

• Despite ongoing tensions in the Middle East and disruptions to commodity transport through the Strait of Hormuz, OPEC remains optimistic about the prospects for the oil market.

• The organization's secretary-general stressed that global demand for crude oil remains strong, and the cartel currently sees no reason to change its forecasts.

• OPEC still expects global oil demand to grow by about 1.2 million barrels per day in 2026.

• We are observing negative sentiment in the precious metals market.

• Gold is losing about 0.7% and falling below 4500 USD per ounce.

• Silver is losing over 1.5% and pulling back below 73 USD per ounce.

🪙 Cryptocurrencies

• Clearly negative sentiment is also evident in the cryptocurrency market.

• Bitcoin is losing 0.7% and sits below 64 000 USD.

Ethereum is losing nearly 3% and approaching 1700 USD.