Tech sell-off, hot US inflation and surprise UK growth: Oct 15 markets wrap

Technology shares came under pressure as a hot US inflation reading revived talk of Fed rate hikes and investors questioned AI spending. In the UK, August growth beat forecasts days before the chancellor's first Budget.

Maz Vantage ·

Markets: inflation worries weigh on tech

Wall Street futures pointed lower on Thursday as a hot US consumer price reading revived concerns about Fed rate hikes, with investors also watching TSMC results (Investing.com). In Asia, Japan's Nikkei 225 closed down 4.77% (Investing.com). The dollar slipped despite the hot CPI figure, while the yen firmed on intervention warnings (Investing.com).

The Guardian's live coverage described an intensifying tech sell-off, with chip shares tumbling as markets fret about AI (The Guardian). MarketWatch argued that the AI trade is splintering as inflation fears rattle highly valued tech stocks, and that steep inflation and higher borrowing costs could threaten the AI buildout (MarketWatch).

Anthropic's pre-IPO revenue picture

Two outlets framed Anthropic's growth differently as it prepares for a stock market debut. MarketWatch said its revenue growth appears to be cooling, adding to investors' AI jitters (MarketWatch). The BBC reported that the company has flagged a revenue surge to investors, as some of them worry about the amount being spent on AI infrastructure (BBC). The feeds do not give enough detail to reconcile the two accounts.

Company news

  • Netflix is cutting about 1,000 jobs, roughly 6% of its global workforce, its steepest cuts since 2022 (BBC; The Guardian).
  • Rocket Lab's shares slid after it pushed back the first launch of its Neutron rocket, which will no longer fly this year (MarketWatch).
  • Lufthansa won the race to privatise TAP Air Portugal ahead of Air France-KLM, and will pay more than €1 billion for a little under half of the Portuguese carrier's capital (Le Monde).

United Kingdom: growth beats forecasts before the Budget

Official figures show the UK economy grew 0.7% in the three months to August, helped by a surprise uptick in the month, ahead of Chancellor John Healey's first Budget (BBC). The Guardian's live blog cited analysts who expect the OBR to lift its growth forecast for the year from 1.1% to 1.4%, but who say elevated borrowing costs still squeeze fiscal headroom and add pressure for tax rises. The same coverage suggested the data could encourage the Bank of England to raise rates as soon as November (The Guardian).

On the household side, the TUC said UK households have paid on average £13,961 more since 2021 on mortgages, loans, energy and water, and urged the chancellor to address living costs in the Budget (The Guardian). Separately, top IMF officials have praised UK plans to reduce annual borrowing, according to the BBC's Faisal Islam (BBC).

Central banks

The Fed published the minutes of its 15-16 September FOMC meeting on 7 October (Federal Reserve), and on 13 October the minutes of its discount rate meetings held in August and September (Federal Reserve). The ECB's latest publications include speeches by Philip R. Lane on "The AI opportunity for Europe" (ECB) and by Frank Elderson on resilience in the face of uncertainty (ECB). The feeds provide no rate decision today.

France: household budgets and public finances

Le Monde reports that so-called pre-committed expenses, such as rent, electricity and phone bills, absorb about 30% of French households' disposable income, leaving the poorest exposed to the surge in energy prices (Le Monde). Agirc-Arrco will raise private-sector supplementary pensions by 1.4% on 1 November, a decision that runs against the government's stance (Le Figaro).

As deputies examine the 2027 finance bill, Public Accounts Minister David Amiel defended savings on pensioners, arguing that 80% of the rise in public spending over 50 years has gone to pensions and health (Le Figaro). The Court of Audit's tax-levy body backed a reduction in the pensioner tax allowance and analysed other contested budget proposals (Le Figaro). Economist Thomas Piketty called for a referendum on a new "national solidarity tax" on fortunes above €100 million (BFM Business).

Sources