As of 12:00 Germany time (CEST, UTC+2)
TL;DR: Global equities struggled on Thursday as Broadcom's weaker outlook raised questions around the durability of the AI-led rally. Oil eased after the Israel-Lebanon ceasefire, but U.S.-Iran tensions remained unresolved, the dollar stayed firm and bond yields held near restrictive levels. The market now faces pressure from both sides: geopolitical risk remains elevated, while the equity offset has become less automatic.
In Asian Equity Markets stocks fell sharply as Broadcom's outlook challenged the assumption that AI-chip demand would continue expanding without interruption. South Korea's KOSPI fell as much as 2.6 percent, while Japan's Nikkei, Hong Kong and Taiwan declined between roughly 1.4 and 1.7 percent. The move was notable because Asian markets had been among the clearest beneficiaries of the AI investment cycle earlier in the week. Thursday's pullback did not invalidate that theme, but it showed that concentrated technology leadership is vulnerable when expectations become sufficiently demanding.
In European Equity Markets stocks were broadly steady as lower oil prices offset weakness in semiconductor shares. The pan-European STOXX 600 edged around 0.1 percent higher, with retail and luxury shares supporting the index while chipmakers fell after Broadcom's results. Infineon Technologies and STMicroelectronics both declined sharply as investors reassessed the pace of AI-related demand growth. Europe received some relief from lower crude, but the regional backdrop remains complicated by persistent inflation pressure and expectations for an ECB rate hike next week.
In U.S. Equity Markets futures pointed lower after Broadcom shares fell sharply in extended trading. The company's weaker-than-expected revenue outlook and unchanged longer-term forecast created a rare challenge to the AI-led narrative that has supported major indexes near record highs. The issue is not that AI spending has stopped. It is that investors are beginning to test whether current valuations require a level of demand growth that is becoming harder to sustain. That distinction matters because technology leadership has been the main equity offset against higher oil, tighter policy expectations and geopolitical uncertainty.
In Commodities Markets oil prices eased after Israel and Lebanon agreed a ceasefire, creating some hope that broader regional tensions could cool. Brent crude traded near $97 per barrel, down close to 1 percent. The move provided limited relief, but the U.S.-Iran conflict remained unresolved. Bahrain reported intercepted missiles and drones, Kuwait briefly suspended air traffic after an attack, and Iranian officials said there had been no tangible diplomatic progress. Lower crude helped the tape, but it did not amount to a clean de-escalation signal.
In Currency Markets the U.S. dollar remained firm near a two-month high after stronger-than-expected U.S. services data. The dollar index traded around 99.45, while the yen strengthened modestly toward 159.9 per dollar after briefly moving through the 160 intervention zone earlier in the week. The yen's recovery created some breathing room for Japanese authorities, but the broader FX message remained defensive. Stronger U.S. data, elevated policy expectations and ongoing geopolitical uncertainty continued to support the dollar.
In Bond Markets yields held near restrictive levels as investors balanced slightly lower oil prices against persistent inflation risk and firmer U.S. economic data. The U.S. 10-year Treasury yield traded around 4.49 percent, while Germany's 10-year Bund yield eased modestly toward 3.02 percent ahead of an expected ECB rate hike next week. The bond market remains the key macro constraint. A sustained U.S. 10-year yield above 4.60 percent would raise the valuation burden on growth stocks further, particularly if oil also moves back above $100.
The Cross-Asset Read
Thursday changed the shape of the market debate.
Earlier in the week, the main question was whether AI leadership could continue offsetting the oil shock. Broadcom introduced a second question: what happens if the offset itself becomes less reliable?
That does not mean the AI investment cycle has broken. The theme remains powerful, earnings expectations remain supportive and one company's outlook does not settle the broader debate. But the market's tolerance for disappointment is lower when valuations are elevated and the macro backdrop is already restrictive.
The relevant flag remains straightforward: Brent sustaining a move above $100, or the U.S. 10-year yield holding above 4.60 percent, would tighten the inflation-rates-equity chain again. If those thresholds are tested while AI-linked earnings expectations are also being revised lower, the market loses part of the cushion that has supported the rally.
For now, lower oil is providing some relief. But Thursday showed that the equity tape cannot rely on the same narrow offset indefinitely.
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