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Global markets faced heavier selling pressure as mixed earnings from US technology companies raised doubts about the returns on artificial intelligence investment, while US data reinforced expectations of a rate hike by the Federal Reserve.

Wall Street ended lower, led by a record one-day drop in Alphabet shares, while European bourses closed higher on strong corporate results. Asian markets were mostly in negative territory except Hong Kong, and investors moved into safe-haven assets.

Wall Street falls as AI spending worries build

US technology shares dragged New York equities lower yesterday as investors weighed the cost of building AI infrastructure. Alphabet, Google's parent company, reported a 25% decline in third-quarter profit that came in below market expectations, sending its shares down 12.6%. The drop was the largest single-day loss after an earnings release in the company's history, and roughly $500 billion was wiped from its market value.

Analysts said the highly profitable search business provides Alphabet with substantial funding capacity for AI infrastructure spending, and that investors are worried AI chatbots are taking an increasing share of Google's search traffic.

Microsoft posted profit and revenue above forecasts, though capital expenditure came in lower than projected. US media reported that the company plans to raise about $25 billion through a bond sale. Its shares finished the session flat.

Chipmaker Intel and e-commerce group Amazon released results after the market closed. Intel's third-quarter net profit fell 18% from a year earlier. Amazon's third-quarter net sales rose 12% year on year while net profit slipped 2.4%. In after-hours trading, Intel shares lost 22.4% and Amazon shares fell 7.1%. The Dow Jones shed 0.25%, the S&P 500 dropped 0.3% and the Nasdaq lost 1.38%. US index futures started the day in negative territory.

US data strengthen the case for a December hike

The US economy grew faster than expected in the third quarter, expanding 3.4%. The core personal consumption expenditures price index, the Fed's preferred inflation gauge that strips out food and energy, rose 0.3% in September from the previous month and 3.1% from a year earlier, matching expectations.

Inflation risks in the US remain firm, and the probability of a Fed rate increase in December rose after the data. Gold traded around $4,000 an ounce, down 0.5%, as expectations of a December move strengthened.

Investors seeking safe-haven assets pushed the US 10-year bond yield down 10 basis points to as low as 4.94% yesterday; it stood at 4.93% today. A stronger yen against the dollar and the decline in bond yields sent the dollar index down 0.1% to 101.8.

Oil rises on Iran tension; crypto retreats after Binance breach

The prospect of a new US military operation against Iran overshadowed hopes of diplomatic progress between the sides and revived concerns over supply disruptions. December Brent crude rose 1.1% to $116.1 a barrel.

Cryptocurrency exchange Binance said the estimated size of a security breach on its platform was $6.3 billion, with about $3 billion in assets frozen. Bitcoin fell 0.8% to $78,099 and Ethereum dropped 0.6% to $2,242.

European shares close higher as ECB holds rates

European bourses ended yesterday in positive territory, supported by well-received corporate earnings. The focus was on the European Central Bank's rate decision. The ECB kept its three main policy rates unchanged in line with expectations, despite the energy crisis triggered by tensions in the Middle East and rising price pressures.

ECB President Christine Lagarde pointed to increasing inflation risks in the euro area and signalled that another rate rise in December remains on the table. The ECB also announced that Lagarde will step down on February 7, 2027, even though the term normally runs until October 2027.

Energy company Shell reported third-quarter net profit of $10.81 billion, up 99% from a year earlier and above market expectations. Its shares gained 2.06%. The FTSE 100 rose 0.26%, the DAX 40 climbed 1.31%, the CAC 40 added 1.05% and the FTSE MIB 30 gained 0.36%. European index futures opened the day mixed.

Asia markets drop except Hong Kong

The negative tone from falling US technology shares carried over into Asian markets. The Bank of Japan kept its policy rate at 1.25% in line with expectations, the highest level since 1995. The decision was carried by eight votes to one, with board member Hajime Takata voting for a hike.

The bank said for the first time since adopting a 2% inflation target in 2013 that price increases are generally consistent with that goal. Japan's Tokyo consumer price index rose 2.8% in October, above expectations, strengthening expectations of further rate increases.

Near the close, Japan's Nikkei 225 was down 2.3%, South Korea's Kospi lost 2.9% and China's Shanghai Composite slipped 0.3%, while Hong Kong's Hang Seng advanced 1.6%.

Borsa Istanbul steady; fund payments start today

Borsa Istanbul's BIST 100 index rose 0.13% on Wednesday to close at 11,165.44 points in a session dominated by buying. There was no trading yesterday because of the October 29 Republic Day holiday. On the exchange's derivatives market, the October futures contract on the BIST 30 index gained 0.28% versus Wednesday's regular session close.

The lira finished yesterday at 49.8916 per dollar, up 0.13%, and traded at 49.9458 in interbank dealings at today's opening, 0.10% above the previous close.

Payments of up to 1 million lira under the extraordinary liquidation begin today through İş Bankası and Ziraat Bankası, starting with the smallest amounts and moving toward larger ones.

Analysts said the agenda today includes the minutes of the Central Bank of the Republic of Turkey's Monetary Policy Committee meeting, along with growth figures for the euro area and Germany, the euro area unemployment rate and German inflation. They put resistance for the BIST 100 at 11,300 and 11,400 points and support at 11,000 and 10,900 points.

Key takeaways

• Alphabet shares plunged 12.6% after third-quarter profit fell 25% below expectations, erasing about $500 billion in market value.
• US third-quarter growth of 3.4% and steady core PCE inflation raised the odds of a Fed rate hike in December, with gold near $4,000 an ounce.
• The ECB held rates steady while Lagarde signalled a December increase remains possible; European indexes closed higher.
• Borsa Istanbul's BIST 100 rose 0.13% on Wednesday as payments of up to 1 million lira under an extraordinary liquidation start today.