AI Worries Hit Stocks as French Yields Top 5% and UK Confidence Slumps

Worries over AI spending weighed on equities, French bond yields passed 5% ahead of a possible Moody's rating decision, and UK consumer confidence fell sharply before the budget.

Maz Vantage ·

Markets: AI-spending worries weigh on stocks

Concerns about artificial intelligence weighed on equities this week. Le Monde reports that Wall Street fell on Thursday after Meta said it wants to raise new capital to fund its very large investments, which fed investors' doubts about whether companies in the sector can generate profits (Le Monde). The Guardian's live business coverage also described global stocks as wobbling on growing AI fears (The Guardian).

France: bond yields above 5% and a possible rating decision

Le Monde notes that French government bond yields have passed 5% for the first time since 2002. It describes the ECB as the main safeguard in a budget crisis, while IMF intervention is considered almost certainly ruled out (Le Monde). Le Figaro argues that Moody's has every reason to downgrade France's rating on Friday, which would bring its view into line with those of Standard & Poor's and Fitch. The outcome was not yet reported in the feed (Le Figaro).

United Kingdom: confidence falls ahead of the budget

The Guardian reports that the GfK consumer confidence barometer fell 11 points in October to -24, the fastest drop outside the Covid pandemic since the 2016 Brexit vote. The report links this to cost-of-living pressures, the economic fallout from the war in the Middle East and domestic inflation of 3.5%, less than a week before John Healey's first budget (The Guardian). The Guardian's live coverage adds that retail sales in Great Britain fell in September as shoppers cut back (The Guardian).

On energy, official forecasts say Great Britain will have enough gas and electricity this winter, partly by paying higher prices than neighbouring markets to secure imports, which implies some of Europe's highest energy costs (The Guardian; BBC).

Companies and technology

  • Barclays is cutting 5,000 jobs, a 5% reduction in its workforce, as it relies more on AI (BBC).
  • L'Oreal's chief executive says weight-loss drugs (GLP-1s) are a "very important phenomenon" for the beauty group, which is seeing an impact on beauty and skincare sales (BBC).
  • Meta was reported to have been fined $25bn over user data privacy, the largest fine to date against the company (BBC).
  • Securitas reported third-quarter margin progress below expectations (Investing.com).

Policy: California wealth tax vote

California will vote on 3 November on a proposal for an exceptional 5% tax on billionaires' wealth, according to Le Monde (Le Monde). The BBC reports that Mark Zuckerberg had said he would leave the state over the tax, which is not yet in force (BBC).

Central banks

The latest Federal Reserve items in the feed are the minutes of the 15-16 September FOMC meeting, published on 7 October (Federal Reserve). The ECB's recent publications are speeches and interviews by board members rather than a policy announcement (ECB).

Sources