Global stock markets retreated and U.S. futures declined on Tuesday as investors awaited the outcome of U.S. midterm elections. At the same time, oil prices climbed following defensive strikes by the United States on Iranian targets in the Strait of Hormuz.
Global Market Movements Ahead of U.S. Midterms
World shares slid on Tuesday as investors watched the U.S. midterm elections, an event that could reshape the final two years of U.S. President Donald Trump’s time in the White House. Republicans and Democrats fought for control of Congress and key governor seats amid voter frustration over high prices. In early European trading, the CAC 40 in Paris fell 0.4% to 8,007.84, Britain’s FTSE 100 slid 0.3% to 10,726.55, and Germany’s DAX declined 0.9% to 25,760.67. U.S. stock futures also pointed downward, with the S&P 500 future down 0.3% and the Dow Jones Industrial Average dropping 0.6%.
Asian indexes reflected mixed sentiment. South Korea’s Kospi fell 4% to 5,626.08, led by sharp losses in memory chipmaker SK Hynix, which dropped 5.7%, and Samsung Electronics, which declined 4%. Tokyo markets closed for a holiday. In Hong Kong, the Hang Seng added 0.6% to 23,525.97. Meanwhile, the Shanghai Composite index retreated 0.8% to 3,608.10, near its lowest level in more than a year as gains from market-supporting measures announced Monday were short-lived.
Chinese Central Bank Raises Foreign Exchange Reserve Requirement
Shares of big banks were mostly lower after the Chinese central bank announced that it was raising the foreign exchange reserve requirement ratio for financial institutions to 6% from 4%. In Australia, the S&P/ASX 200 rose 0.3% to 8,880.50.
Currency markets saw the U.S. dollar fall to 157.86 Japanese yen from 157.95 yen, while the euro rose to $1.1202 from $1.1188.
Crude Oil Prices Climb Amid Middle East Tensions
Energy markets moved independently of broader stock losses. International standard Brent crude climbed 1.7% to $106.58 a barrel, while U.S. benchmark crude oil rose 1.5% to $97.88 per barrel. These gains followed defensive strikes conducted by the United States on Iranian targets in the Strait of Hormuz. Global oil prices have climbed to $116.72 per barrel as growing concerns about oil supplies from the Middle East put pressure on energy markets. Higher oil prices may increase the country’s energy import bill, put pressure on foreign currency reserves, and raise transport and business costs. Pakistan should monitor international crude oil prices, regional supply conditions, the rupee-dollar exchange rate, and official domestic petroleum price announcements.
The jump follows a volatile period for petroleum markets. Earlier, indexes had drawn some relief from a recent 7.6% drop in the price of a barrel of Brent crude, which closed at $104.77. Traders continued to grapple with uncertainty surrounding the duration of the war with Iran, keeping shipping routes and regional supply security in sharp focus.
Big Tech AI Spending Sparks Bubble and Profit Worries
Technology shares faced headwinds beyond macroeconomic data. Artificial-intelligence stocks remained shaky amid criticism that they have surged too high and are in a bubble. Worries are growing that all the hundreds of billions of dollars Big Tech companies are pouring into AI data centers won’t yield enough productivity and profit to make the investments worth it.
Recent financial results from Alphabet and other Big Tech companies also showed how AI may be dragging on their own businesses. Google’s parent company burned through more cash during the latest quarter, as measured by something called free cash flow, and it reported slower-than-expected growth in its search business. Expectations are high for all kinds of companies to continue to deliver big gains in profits.
Earlier coverage: US Stock Futures Struggle as Midterm Election Uncertainty Weighs on Markets
