Global markets mixed as AI fears, Mideast war roil sentiment

Wall Street closed higher on Wednesday despite mounting concerns over artificial intelligence profitability, though Asian markets suffered heavy selloffs Thursday as escalating conflict between the US and Iran drove oil prices higher and overshadowed strong earnings from Meta and Tesla.

AI profitability doubts weigh on sentiment

Meta reported a 264% surge in third-quarter net income to $9.9 billion, while Tesla's earnings plummeted 43% to $787 million during the same period. Lingering questions over the return on massive artificial intelligence investments continued to unsettle investors, with high inflation and expectations of prolonged monetary tightening weighing heavily on technology sector valuations.

Middle East war risks disrupt energy markets

US President Donald Trump defended the decision to wage war against Iran, claiming the offensive prevented Tehran from acquiring nuclear weapons. "It's one of the best things that we've done," he said, asserting that Washington's intervention had averted a nuclear strike by Tehran. The price of December-delivery Brent crude climbed 1.8% to $110.7 a barrel on Thursday, while the State Department prepared to evacuate diplomatic personnel from Saudi Arabia — though spokesperson Tommy Pigott denied plans for a wider Gulf withdrawal, according to the New York Times.

Regional divergences deepen

Asian equity markets suffered broad-based selloffs as rising oil prices threatened import-dependent economies in the region, with Japan's Nikkei 225 falling 2.1%, China's Shanghai Composite dropping 1.3%, and South Korea's Kospi declining 3.7% near Thursday's close. European markets had found relief Wednesday after days of negative trading driven by French political unrest, with Germany's DAX 40 growing 1.35% and France's CAC 40 rising 1.06%, though French 10-year bond yields hit 5% for the first time in 24 years.

Monetary policy outlook diverges

The US Federal Reserve is expected to maintain its policy rate at next week's meeting with an 86% probability, while markets are pricing in a 25-basis-point hike for December, money market estimates show. All eyes turned to Türkiye's Central Bank on Thursday, with markets expecting a 100-basis-point rate cut following September's hold at 37% — highlighting divergent monetary paths between major economies. The US dollar slipped 0.1% to 101.5 on Thursday, while the 10-Year Treasury yield dropped three basis points after trading flat on Wednesday.