ORLANDO, Florida, Jan 29 (Reuters) - Volatility coursed through world markets on Thursday as fears over a U.S. strike on Iran and threat of another U.S. government shutdown rattled oil and metals, while AI bubble fears hammered tech stocks and pushed the Nasdaq and S&P 500 into the red.
More on that below. In my column today I look at Federal Reserve Chair Jerome Powell's press conference on Wednesday, and why it was revealing for what he didn't say on Fed independence rather than what he did say on the economy.
If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today.
1. Trump weighs Iran strikes to inspire renewed protests,sources say 2. U.S. trade deficit widens by the most in nearly 34 yearsin November 3. Trump and Democrats seek to head off shutdown as fundingbill fails in Senate 4. Big Tech results show investor demand for payoffs fromheavy AI spending 5. Europe's euro worry a mirror of U.S. dollar dilemma?:Mike DolanToday's Key Market Moves
* STOCKS: Wall Street falls, Nasdaq -0.7%. Indonesia -10%at one point before paring losses, Germany's DAX -2%. * SECTORS/SHARES: U.S. tech slumps 2%, but communicationssoftware +3%. SAP -15%, Microsoft -10%. Apple +4% in after-hourstrade following Q4 results. * FX: Dollar back on the defensive, bitcoin -6%. * BONDS: Treasury yields dip 2-3 bps, curve bull steepens. * COMMODITIES/METALS: Oil soars as much as 5%. Gold,silver hit new peaks, then close lower. Copper at record hightoo.Today's Talking Points
* Oil on a tear
The price of oil is shooting higher, propelled by renewed geopolitical risk concerns, namely U.S.-Iran tensions. Brent crude broke above $70 a barrel on Thursday for the first time since July, WTI crude is the highest since September.
Sustained high energy prices will worry policymakers. Year-on-year oil price changes have been disinflationary since 2024, and at the start of this year were running at -25%. That's now -5%. With the affordability crisis likely a key issue in the U.S. midterm elections, President Donald Trump may also be getting twitchy.
* Volatility fuels dislocation
Thursday's trading was marked by sharp price swings across all asset classes, with the lurches particularly extreme in commodity markets. Gold, silver and copper soared to fresh highs, but later slumped - gold and silver closed the day lower.
They seem to be buckling under the weight of speculative excess that has fueled their eye-watering gains recently, particularly the precious sector. Volatility and price dislocations have spilled over into the dollar and FX this week too. Equity sentiment isn't immune.
* Tech wreck
Is the AI bubble starting to deflate? Shares in some of the world's biggest tech firms plunged on Thursday as investors fretted whether the hundreds of billions of AI spend will yield adequate returns. Microsoft and SAP posted double-digit losses.
As analysts at Carlyle Group note, the history of transformative technology shows the AI bubble will deflate or burst. But that's part of the process, so some pain is on the way. "The bottom line is that bubbles are endemic to technological revolution."
What could move markets tomorrow?
* Japan retail sales (December) * Japan industrial production (December) * Japan Tokyo inflation (January) * Taiwan GDP (Q4, prelim) * Euro zone GDP (Q4, flash) * Germany unemployment (January) * Germany inflation (January, flash) * U.S. producer price inflation (December) * U.S. Chicago PMI (January) * U.S. earnings including Exxon Mobil, Chevron, AmericanExpress, Verizon * Atlanta Fed President Alberto Musalem speaksWant to receive Trading Day in your inbox every weekday morning? Sign up for my newsletter here.
Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
(By Jamie McGeever; Editing by Nia Williams)
