Global Markets Tumble on Rate Hike Fears and AI Spending Spree
Shares are selling off across the globe, driven by fears in the US over interest rate hikes and a debt-fuelled spending splurge on AI infrastructure. The sell-off reflects growing investor anxiety that the Federal Reserve may tighten monetary policy faster than anticipated, while massive capital expenditure on artificial intelligence by major tech companies raises concerns about overinvestment and future returns.
Brent Crude Drops After US Waives Iran Sanctions
Brent crude has dropped just over 1% to $77.11 a barrel after the US waived sanctions on Iran for 60 days, as both sides try to hammer out a permanent peace deal. The temporary relief from sanctions increases the potential for more Iranian oil to enter the global market, putting downward pressure on prices. Traders are closely watching negotiations between Washington and Tehran for signs of a lasting agreement that could further boost supply.
Gold Prices Slide as Dollar Strengthens on Rate Hike Bets
Gold prices dropped 2% as the US dollar hit a one-year high, making gold more expensive for overseas buyers, on increased rate hike expectations. Traders now see an 86% chance of a rate hike by December, up from 61% before last week’s Fed meeting. The stronger dollar and higher yield environment reduce the appeal of non-yielding assets like gold, prompting investors to shift towards interest-bearing instruments.
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Thank you for reading. We’ll be back tomorrow. Stay cool! – JK
