Global markets were mixed this week as earnings from US technology companies raised doubts about whether investments in artificial intelligence will become profitable. The week’s mood was shaped by the Fed’s decision to hold its policy rate at 3.75-4%, as expected, and by Fed Chair Kevin Warsh’s announcement of changes to the meeting calendar.
Tech earnings weigh on sentiment
Alphabet shares fell 12 percent on the week after its third-quarter profit dropped 25 percent year on year. Intel’s net profit fell 18 percent, and its shares lost 20.4 percent. Amazon’s net sales rose 12 percent, but its net profit fell 2.4 percent and its shares slid 6.6 percent.
Anthropic had filed a registration statement with the Securities and Exchange Commission for an initial public offering earlier in the week, lifting tech optimism before the mixed reports weighed on the sector.
Fed holds, calendar shifts
The Fed kept its policy rate at 3.75-4%. Warsh said one of the eight meetings next year will focus on general monetary policy strategy, with no rate vote or policy statement expected. He also said: “Reducing inflation is our responsibility.”
US inflation has been above the Fed’s target for about six years. Rising inflation risks raised the probability of a rate hike in December.
Gold and oil move in different directions
Gold fell to a one-year low amid expectations of a December Fed hike, ending the week down 3 percent at $3,876 an ounce. December Brent crude futures rose 0.5 percent on the week to $117.60 a barrel.
The European Central Bank held its main rate at 3 percent despite an energy crisis triggered by Middle East tensions. President Christine Lagarde signalled that a new hike was on the table for December.
Week ahead
Next week’s calendar includes US nonfarm payrolls on Friday and the Bank of England’s rate decision on Thursday, where a 25 basis point increase is expected. Asian markets were positive excluding China.
Source: Federal Reserve · European Central Bank
