Global Markets Tumble Amid Iran War Fears
Concerns over a potential war with Iran sent shockwaves through financial circles, driving oil prices up by more than 2% on Thursday.
Global markets took a hit on Thursday as concerns over a potential war with Iran sent shockwaves through financial circles. Oil prices surged by more than 2% to close at over $99 a barrel, driven in part by fears of disruptions to global energy supplies.
Investors are becoming increasingly risk-averse, seeking out safe-haven assets like Treasury bonds amidst the turmoil. Demand for these bonds has increased significantly, with yields on the 10-year note falling below 5% - its lowest level since late September. This trend bucks recent weeks' patterns, where investors had been showing a preference for higher-risk investments.
The US military and diplomatic personnel are being evacuated from several countries in the Middle East, in preparation for possible military action against Iran. According to reports, key targets could include Iran's energy infrastructure and nuclear sites, sparking concerns about potential retaliation from Iranian officials.
The market volatility continues as concerns about an impending war with Iran and high artificial intelligence (AI) spending weigh heavily on investor sentiment. Tech stocks are leading the declines in equity markets, with Meta and Tesla experiencing significant drops following their quarterly earnings reports.
Meta's earnings exceeded forecasts, but only after accounting for massive legal penalties paid by the company last quarter, which totaled billions of dollars. The tech giant also warned investors that it plans to increase its spending next year to accommodate growing demands for computing power. This move comes on top of a separate regulatory filing that revealed Meta intends to allocate an additional $825 billion towards contracts related to its AI infrastructure development.
Tesla's quarterly earnings report, however, fell short of investor expectations as the company announced plans to rein in capital expenditures, dampening hopes for more aggressive expansion strategies.
The technology sector's struggles continued to weigh on global markets as Nvidia CEO Jensen Huang warned that capital to finance AI investments is becoming increasingly scarce due to higher interest rates and existing spending commitments.
Meanwhile, European stocks have been declining in recent weeks, partly due to a significant sell-off in French government debt. This development has added to the overall market uncertainty, contributing to Thursday's downturn.
The S&P 500 remains near its all-time high set earlier this month despite the current market volatility, but a prolonged stumble could still impact President Donald Trump's economic argument ahead of the November midterm elections.
Facts based on reporting originally published by NBC News World.
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