European markets were poised for a cautious open on Wednesday after a mixed session in Asia, where renewed enthusiasm for artificial intelligence was tempered by hotter-than-expected US inflation data and the prospect of a larger Federal Reserve rate hike next month.
The tech sector, which suffered a sharp sell-off last week on fears of Democratic-led regulation, has rebounded this week as investors snapped up bargains and reassessed the risks. Sentiment was further lifted by strong earnings from data centre operator CoreWeave, which projected sales of $13–13.3 billion (€11.6–11.9 billion) for the year, beating analyst estimates. The news helped soothe concerns about the company's heavy debt load, which had triggered a wave of selling last month.
Adding to the positive mood, Anthropic, the maker of the AI assistant Claude, filed for an initial public offering that could raise up to $64 billion (€57.1 billion), valuing the company at as much as $1.4 trillion (€1.25 trillion). While this is below earlier expectations of a $100 billion raise, the IPO is seen as a key test of the durability of the AI investment boom. Anthropic's filing also revealed that quarterly revenue surged to $17 billion (€15.2 billion), up from just $1.4 billion a year earlier.
In another sign of the sector's health, Bloomberg reported that OpenAI, the creator of ChatGPT, generated $10 billion (€8.92 billion) in quarterly revenue for the first time in the July–September period, a near 50% increase from the previous quarter and a threefold jump year on year.
However, Nvidia remained in the spotlight following the revelation of an affair between CEO Jensen Huang and a woman reportedly suspected of being a Chinese spy, which has triggered an FBI investigation. The company's shares have been under pressure, with some investors adopting a wait-and-see approach.
Inflation worries resurface
Wall Street's three main indexes all ended lower on Tuesday, snapping a two-day rally, while Asian markets were mixed. Tokyo, Seoul, and Taipei – home to many of Asia's leading AI-linked firms – continued to rise, along with Singapore and Jakarta. But Hong Kong, Shanghai, Sydney, Wellington, and Manila saw losses.
Traders are now focused on the possibility of a larger-than-expected rate hike by the Federal Reserve in December. US consumer prices rose 0.4% month on month in October, a slowdown from September's 0.6% but above the 0.3% forecast. While energy price increases moderated significantly, food, medical care, and household furnishings all saw sharp price rises.
Chicago Fed President Austan Goolsbee called the reading "another distressing report, borderline disturbing," while Fed Governor Christopher Waller suggested he could support a 50-basis-point hike. Dallas Fed President Lorie Logan also voiced strong support for swift action to curb inflation.
"Market participants continue to navigate the political implications of the Democratic sweep, and the economics of AI infrastructure," said Chris Weston of Pepperstone. He noted that investors are being forced to "reassess assumptions around future revenues, cash flows and funding conditions," adding that "a hotter-than-expected US CPI print, a heightened focus on Anthropic's IPO, and a major buyers' strike on Nvidia" mean there is "no shortage of catalysts driving market price action."
Oil prices edged up after falling on Tuesday on hopes for a US-Iran agreement to end their conflict and reopen the Strait of Hormuz. Brent crude hovered around $92 (€82.06) a barrel, after dipping below $90 (€80.28) for the first time since August. Both contracts are down about 20% since the start of the month.
For European investors, the global tech and inflation dynamics are closely watched, as the continent's markets are increasingly tied to US monetary policy and the fortunes of AI-related companies. The recent shifts in European markets following the US midterms have already shown how sensitive the region is to political and economic developments across the Atlantic.
