The market spent Wednesday convincing itself the AI trade was back. By Thursday morning it had changed its mind again. Tesla cut its spending plans and fell after hours, Lam Research slid on a cautious outlook, and Meta’s bigger AI budget won only a polite cheer. Asia sold its chipmakers, Nasdaq futures are pointing lower, and a drone attack on a Saudi oil field has pushed Brent back above $110. For London, that is a familiar mix: energy shares with a tailwind, technology without one, and a pound that has just shrugged off the hottest inflation reading in almost a year.
The 60-Second Market View
Wall Street closed Wednesday on a high note. The S&P 500 rose 0.58 per cent to 7,757.17, the Nasdaq Composite gained 1.05 per cent to 26,702.86 and the Dow added 0.69 per cent to 52,856.09, helped by SpaceX’s first results as a listed company. The VIX, Wall Street’s fear gauge, fell to 16.68.
The mood turned after the bell. Nasdaq 100 futures are down about 1.3 per cent and S&P 500 futures about 0.6 per cent. Hong Kong’s Hang Seng is down nearly 3 per cent, South Korea’s KOSPI more than 2.5 per cent and Tokyo’s Nikkei about 1.7 per cent. Brent crude is near $110.60 a barrel, gold has slipped back below $4,100 an ounce, sterling is steady near $1.34 and the 10-year gilt yields about 5.37 per cent.
What Happened Overnight?
The after-hours earnings were a split decision. Meta beat forecasts with third-quarter revenue of $64.6 billion and lifted the bottom of its full-year capital spending range to $135 billion to $145 billion. Its shares rose about 2 per cent after hours, but the detail underneath made people pause: spending on servers and data centres ran ahead of the cash its business generated, leaving free cash flow negative for the first time since its 2012 flotation, and a plan to issue a new class of non-voting shares revived questions about how the AI buildout gets funded.
Tesla went the other way. Revenue was flat at $28.05 billion and adjusted earnings came in slightly ahead of forecasts, but the company trimmed its capital spending forecast and its shares fell more than 3 per cent after hours. Lam Research, which makes the machines that make chips, reported record revenue but guided in line rather than above, and its shares dropped about 7 per cent. Texas Instruments beat and guided higher, which shows the demand is still there; it simply was not enough to change the tone.
Asia picked up where the futures left off. Samsung and SK Hynix lost around 3 per cent, the KOSPI gave back much of Wednesday’s surge, and Hong Kong’s technology names led a broad slide. The Bank of Korea left rates on hold at 3 per cent, while in Japan a deputy governor at the Bank of Japan signalled he was ready to raise borrowing costs.
The Big Story: The AI Trade Loses Its Nerve
The quote of the morning came from KCM Trade’s Tim Waterer, who told Bloomberg that the market “frets when companies ramp spending, and it frets when they pull it back.” That is exactly where investors are. Last week the Nasdaq 100 had its worst week since the April 2025 tariff shock and chip stocks fell for eight sessions in a row. SpaceX and Super Micro gave the bulls a breather on Wednesday. Last night’s results took it away again, not because the numbers were bad, but because they did not settle the bigger question.
That question is simple to ask and hard to answer: when does the money going into AI start coming back out? Meta is spending more than its core business generates in cash, which is a bold bet even for one of the most profitable companies in the world. Tesla is spending less, which the market reads as a lack of conviction. Lam is the supplier to all of it, and an in-line outlook from the shovel-seller is not what you want to hear in a gold rush.
The second-order effect matters for UK investors. The FTSE 100 has little direct technology exposure, but a shaky Nasdaq tends to drag on global risk appetite, and the Asian sell-off will hit the mining and Asia-facing names that London does carry. Meanwhile the parts of the market that do well when oil rises, BP and Shell above all, are getting help from the Middle East. That is why London can hold up on mornings when New York is nervous.
Then there is oil itself. Saudi air defences shot down a drone aimed at Aramco’s Shaybah field on Wednesday; falling debris killed two contractors, although the energy ministry said operations were not disrupted. Separately, the US has ordered diplomats out of Saudi Arabia as Houthi attacks intensify, and the New York Times reported that US and Israeli military planners have drawn up options for renewed strikes on Iran after next month’s midterm elections. Gulf exports are actually running above pre-war levels, so this is a risk premium rather than missing barrels. But a risk premium is still a price, and it is being paid at the pump and in inflation forecasts.
FX
Sterling has handled a difficult week well. September inflation came in at 3.5 per cent, above the 3.4 per cent most economists expected, and the pound held near $1.34 and hit a 17-month high against the euro, with the euro buying about 83.9 pence. A hotter inflation number keeps a Bank of England rate rise on 5 November firmly on the table, and that is supporting the currency. The dollar index is a touch softer near 101.6, the euro is near $1.124 and the yen has firmed slightly to about 157.7 per dollar after the Bank of Japan’s hawkish signal.
Equities
Expect a softer European open, led by technology and chip equipment suppliers after Lam’s slide, while energy shares should find support from Brent. The FTSE 100 closed Wednesday up 0.19 per cent at 10,752.88, and its mix of oil, banks and defensive stocks gives it some protection on a morning like this. In the US, Tesla and Lam will be the obvious pre-market movers, with Meta the test of whether investors are willing to pay up for heavier spending.
Bonds
Government bonds are calm, which is itself interesting given the oil move. The US 10-year Treasury yields about 5.09 per cent, a little lower overnight, and the 2-year about 4.78 per cent. The 10-year gilt is near 5.37 per cent and the 2-year near 4.91 per cent, below where they stood before Wednesday’s inflation release, which suggests the market had already priced in a hot number. France’s 10-year yield remains just above 5 per cent after touching that level on Wednesday, a reminder that public finances are under scrutiny across Europe, not just in Britain ahead of the 28 October Budget.
Commodities
Brent is up about 1.6 per cent near $110.60 and US crude near $98.50, close to five-month highs. Gold has had a poor week; spot is near $4,092 an ounce, down about 1.2 per cent, as high real yields continue to blunt its appeal even with tension in the Gulf. Silver is down more than 2 per cent and copper about 1.4 per cent, consistent with a cooler mood around industrial and technology demand.
Crypto
Bitcoin is near $82,900, down about 1.9 per cent, and ether is near $2,440. Both are trading like high-risk technology stocks at the moment, so the Nasdaq futures are a better guide to their direction today than anything happening in crypto itself.
Today’s Economic Calendar
08:30 — Swiss National Bank meeting minutes. A read on Swiss policymakers’ thinking on the franc and inflation.
10:00 — UK index-linked gilt auction. Demand for inflation-protected debt is a useful gauge of how worried investors are after Wednesday’s 3.5 per cent inflation reading.
11:00 — UK CBI industrial trends and business optimism. The first look at how manufacturers are coping with energy costs and the Budget looming on 28 October.
12:00 — Turkey central bank rate decision. A cut is expected; a reminder of how differently emerging markets are handling the oil shock.
13:30 — US weekly jobless claims. The US labour market has stayed tight, which is one reason Treasury yields remain above 5 per cent ahead of the Fed’s decision next week.
All day — Middle East headlines. Any further strike on Saudi energy infrastructure would test the $110 level on Brent quickly.
Levels Traders Are Watching
These are reference points, not targets. For GBP/USD, $1.3400 is the round number the pound keeps knocking on, with the $1.3300 area as the nearby floor. For Brent, $110 is the pivot, and a sustained move above this week’s highs would put the five-month peak back in play. On the 10-year gilt, 5.50 per cent remains the line that unsettles the Treasury. On the Nasdaq 100, last week’s lows are the area that would tell you whether this is a wobble or a second leg down. For gold, $4,065 is near-term support after this week’s slide.
Where This Leaves Traders
The bias this morning is cautious on technology and constructive on energy, with the UK sitting somewhere in between. The evidence is clear enough: the strongest AI companies in the world can beat forecasts and still fail to reassure, because the market is now judging them on what they spend rather than what they earn. Until that changes, rallies in chip stocks are likely to be sold more quickly than they would have been six months ago.
What would change that view is next week. Microsoft, Amazon and Alphabet report, and the Fed decides on rates. If those companies show AI revenue growing faster than AI spending, the nerves of the last fortnight will look like a buying opportunity in hindsight. If they do not, the pressure on valuations has further to run. The markets to keep on screen today are Nasdaq 100 futures, Tesla and Lam in pre-market trading, Brent, GBP/USD and the two-year gilt.
The opportunity is that sharp swings around earnings create clear levels to work from. The risk is chasing the first move on a headline-driven morning when oil and tech are pulling in opposite directions. For beginners, the lesson is that a company beating forecasts does not guarantee its shares go up; what matters is how the result compares with what investors were already expecting. If you want to understand how you react on days like this and where your trading could improve, take the free Samuel & Co Trading Trader Assessment before the next big move.
