Markets navigated a moderately eventful European session, digesting the coming and going of this week's heavy slate of central bank events but focused more squarely on a renewed selloff in technology stocks.

Amazon's earnings, released the previous day, reignited fears over artificial intelligence spending and sent tech shares for a spin. The reaction underscores how closely investors are now scrutinizing megacap spending on AI infrastructure, where the central question is whether heavy outlays will generate commensurate returns. US equity futures sank further after the prior session's drop, with S&P 500 futures down 1.1% and Nasdaq futures down 2.4%, and the negative risk setup is reverberating across broader markets.

In a repeat of last week's pattern, traders leaned toward bonds in a flight to safety, sending Treasury yields lower across the board once more. The 10-year yield fell 8 basis points to 4.908%, reinforcing the point that falling yields are offering little comfort to the stock market at this juncture — particularly given the reason has more to do with jitters in tech stocks themselves.

The simultaneous slide in stocks, Treasury yields and gold underscored the unusual character of the day, raising the question of what is spooking markets as all three assets fell together. Under more typical conditions, lower yields would tend to cushion equities and support gold, while safe-haven demand would underpin the dollar, so the synchronized decline instead carries the signature of broad de-risking, in which investors sell what they can to raise cash.

Treasury yields declined even as oil prices stayed underpinned by lingering US-Iran tensions, which pushed WTI crude up by 2.2% to $104.25 on the day.

As the tech selloff intensified, the dollar and gold fell at the same time, leaving investors running out of places to hide. EUR/USD nudged up toward 1.1200 as inflation data across Europe heated up. While Germany is likely to show cooler price pressures in October, stronger evidence of inflation emerged in France, Spain and Italy, alongside flagging growth conditions from third-quarter GDP data.

Gold lost 1.2% to $3,971, with sellers dragging the price to its lowest level since July and testing a firmer break below the $4,000 mark. With tech shares under heavy pressure, margin calls and liquidation fears are a consideration here, and that may be hitting gold much as it did back in March. Whether the metal stabilizes or extends the break below $4,000 is likely to serve as one gauge of how deep the deleveraging runs.

On the data front, eurozone third-quarter GDP beat expectations, though the headline surprise masked a mixed national picture. Germany's preliminary Q3 GDP rose 0.2% quarter-on-quarter versus the 0.1% expected, while France's economy contracted, piling on growth troubles for the European Central Bank. Spain's Q3 growth slowed slightly, and Italy's preliminary GDP came in flat at 0.0% versus the 0.1% expected.

Inflation readings compounded the ECB's headache. German state inflation cooled in October, but price pressures heated up again in France, leaving the central bank caught between a rock and a hard place — a policy squeeze in which tools aimed at restraining prices risk adding further strain to already-soft activity. Spain's inflation remained stubbornly high near 5%, and Italy's October preliminary CPI rose 5.4% year-on-year, well above the 4.6% expected.

In Japan, Bank of Japan Governor Kazuo Ueda said the central bank will stick to its rate-hike path in response to the latest macroeconomic developments. He also tried to play down any declaration of victory over inflation, saying it will be up to the government to make that call. The remarks keep attention on how quickly the bank follows through with further tightening.

Session snapshot:

• CHF and JPY led, USD lagged on the day
• WTI crude oil up 2.2% to $104.25
• Gold down 1.2% to $3,971
• 10-year Treasury yield down 8 bps to 4.908%
• European stocks mostly lower; Nasdaq futures -2.4%
• Bitcoin down 1.8% to $77,448

Looking to the final stretch of the week, attention centers on how tech shares hold up on Wall Street later in the day, with gold's grip on the $4,000 level and the dollar's behavior in any deepening risk aversion offering additional clues about deleveraging pressures. If the selling turns uglier from here, those jitters could translate into broader markets heading into the Halloween weekend.

Source: investingLive