Stock Market Update

U.S. equity futures remain sharply lower, with the S&P 500 futures currently trading 79 points below fair value.

Asian markets finished mostly lower on Friday as renewed concerns surrounding AI spending and valuations pressured technology shares, while Hong Kong bucked the regional weakness. Japan's Nikkei 225 fell 2.1% to snap a three-day winning streak, with Lasertec (-9%), Kioxia (-7%), SoftBank Group (-6%), Advantest (-6%), and Tokyo Electron (-5%) retreating following disappointing U.S. technology earnings. The Bank of Japan held its policy rate at 1.25% but said underlying inflation has reached its 2% target and signaled further tightening ahead, while also announcing plans to accelerate sales of its ETF holdings. China's Shanghai Composite dropped 1.4% and the Shenzhen Component sank 2.7%, with Eoptolink Technology (-14%), Hygon Information Technology (-8%), Zhongji Innolight (-5%), SMIC (-4%), and Cambricon Technologies (-4%) extending the volatile unwind in AI-related shares. Hong Kong's Hang Seng bucked the regional weakness with a 1.5% rebound, supported by Meituan (+4%), AIA (+4%), and PetroChina (+3%), although the index still lost 4.5% in October amid continued mainland outflows. South Korea's KOSPI plunged 3.5% for a second consecutive decline, with SK Hynix (-9%), Samsung Electronics (-6%), and Hyundai Motor (-4%) leading the retreat despite September industrial production surging 9.0% m/m and retail sales increasing 3.6%. The sharp reversals in Korea and mainland China underscore how quickly investors have shifted from rewarding evidence of strong AI demand to questioning whether elevated valuations can withstand increasingly demanding expectations. India's Sensex gained 0.4%, providing another pocket of relative strength as investors now look toward China's October manufacturing PMI for the next read on regional economic momentum.

• In economic data:
  • The Bank of Japan held its policy rate at 1.25%.
  • Japan's October Tokyo Core CPI increased 2.6% yr/yr (expected 2.6%; prior 2.7%), Tokyo CPI increased 2.8% yr/yr (expected 3.3%; prior 2.7%), and CPI excluding food and energy increased 2.4% yr/yr (expected 2.7%; prior 2.7%).
  • Japan's September Industrial Production increased 2.2% m/m (expected 1.2%; prior -2.4%).
  • Japan's September Retail Sales increased 2.3% yr/yr (expected 3.3%; prior 2.9%).
  • Japan's September Unemployment Rate was 2.4% (expected 2.5%; prior 2.5%), and the Jobs/Applications Ratio was 1.19 (expected 1.18; prior 1.18).
  • South Korea's September Industrial Production increased 9.0% m/m (prior -4.6%) and 1.2% yr/yr (prior -1.7%).
  • South Korea's September Retail Sales increased 3.6% m/m (prior -1.8%).
  • South Korea's September Service Sector Output increased 0.5% m/m (prior 0.7%).
  • Australia's Q3 PPI increased 1.1% q/q (expected 1.0%; prior 1.3%) and 3.6% yr/yr (prior 3.6%).

European markets trade mixed as another technology selloff collides with a busy slate of economic data showing stronger-than-expected Eurozone growth but renewed inflation pressure in several major economies. Germany's DAX falls 0.5% as the global AI unwind weighs on Siemens Energy (-5%), Infineon (-3%), and Hochtief (-2%), although Bayer (+4%) rallies after securing a favorable verdict in a Roundup lawsuit. France's CAC 40 edges up 0.2% despite a difficult domestic backdrop, with third-quarter GDP unexpectedly contracting 0.1% q/q and October inflation accelerating to 3.4% yr/yr, while STMicroelectronics (-4%) and Schneider Electric (-3%) retreat with technology shares. The U.K.'s FTSE 100 bucks the broader weakness with a 0.4% gain as AstraZeneca (+3%) advances following better-than-expected results, GSK (+2%) rises, and BP (+1%) and Shell (+1%) benefit from strong earnings and elevated oil prices. The divergence again highlights the FTSE's relative insulation from the AI-driven selloff, with its heavier exposure to energy, health care, and consumer companies contrasting with the technology pressure weighing on continental markets. The STOXX Europe 600 slips 0.2%, while Italy's FTSE MIB falls 0.7% after Italian GDP stagnated and inflation accelerated sharply, and Spain's IBEX 35 declines 0.4% despite Spanish GDP meeting expectations.

• In economic data:
  • Eurozone Q3 GDP increased 0.4% q/q (expected 0.2%; prior 0.6%) and 1.3% yr/yr (expected 1.1%; prior 1.2%).
  • The eurozone's September Unemployment Rate was 6.5% (expected 6.4%; prior 6.5%).
  • Germany's Q3 GDP increased 0.2% q/q (expected 0.1%; prior 0.3%) and 1.2% yr/yr (expected 1.1%; prior 1.0%).
  • Germany's October Unemployment Rate was 6.4% (expected 6.4%; prior 6.4%), and the Unemployment Change was +4K (expected +5K; prior +12K).
  • France's Q3 GDP decreased 0.1% q/q (expected +0.1%; prior 0.0%) and 0.1% yr/yr (expected +0.3%; prior +0.5%).
  • France's October CPI increased 3.4% yr/yr (expected 3.2%; prior 3.1%) and 0.4% m/m (expected 0.2%; prior -0.3%).
  • Italy's Q3 GDP was unchanged q/q (expected +0.1%; prior +0.2%) and increased 0.8% yr/yr (expected 0.9%; prior 1.0%).
  • Italy's October CPI increased 5.4% yr/yr (expected 4.6%; prior 4.2%) and 0.9% m/m (expected 0.1%; prior 0.7%).
  • Spain's Q3 GDP increased 0.6% q/q (expected 0.6%; prior 0.7%) and 2.7% yr/yr (expected 2.7%; prior 2.6%).
  • Spain's October CPI increased 4.9% yr/yr (expected 4.9%; prior 4.9%).
  • The U.K.'s October Nationwide HPI was unchanged m/m (expected -0.2%; prior -0.3%) and increased 0.5% yr/yr (expected 0.6%; prior 0.8%).