The Japan Times - Stocks bounce as traders assess AI fallout, tariffs

Wall Street's main indices shed more than one percent on Monday as the market "went through another disruption trade that was a three-headed monster of tariffs, AI displacement, and private credit concerns", said market analyst Patrick O'Hare.

While dipping further at the open, they soon recovered and pushed higher.

The market's Jekyll-and-Hyde attitude towards AI shifted on Tuesday after an announcement that tech giant Meta had reached an agreement to purchase millions of chips from processor manufacturer AMD, in which it could become a shareholder.

Shares in AMD jumped 6.1 percent as trading got underway, while shares in Meta shed 1.1 percent.

Nevertheless "investors are wary as they brace for further volatility sparked by unpredictable US trade policy and the fallout from AI advances," said Susannah Streeter, chief investment strategist at Wealth Club.

Sentiment had been dampened by renewed concerns about the impact of artificial intelligence on the tech sector, with software firms again in the firing line.

The latest blow came from a report Sunday by a firm called Citrini Research that used possible scenarios set in the future showing parts of the global economy that could be at risk from new tools, such as credit card and food delivery firms.

Adding to the downbeat mood was a post by Anthropic saying its Claude chatbot could help to update the COBOL programming language used on IBM computers. IBM fell more than 13 percent in New York on Monday.

"Traders are concerned with the degree to which AI will disrupt rather than enhance corporate profitability and overall levels of employment," said Joshua Mahony, chief market analyst at Scope Markets.

The releases come after Anthropic earlier this month unveiled a model that could replace numerous software tools, including for legal work and data marketing.

Markets have largely taken in stride the US Supreme Court's decision to strike down much of President Donald Trump's tariff policy and his subsequent move to impose tariffs, initially set at 10 percent, under a different legal authority.

Trump has vowed to raise this level to 15 percent, with exclusions expected to remain for goods covered by sector-specific arrangements and the US-Mexico-Canada trade pact.

However, the move has raised questions about other trade deals Washington has agreed since Trump's tariff blitz in April, with the European Union demanding clarity on the issue before ratifying its agreement with the US.

Observers said 2026 could see more tariff-based friction but they did not expect it to be as painful for markets as last year's upheaval.

Asia markets traded mixed on Tuesday.

Shanghai returned from a week-long holiday to rally, while Tokyo also rose and Hong Kong retreated.

The yen fell against the dollar following local media reports that Japanese Prime Minister Sanae Takaichi had voiced concerns about additional interest rate hikes with Bank of Japan governor, Kazuo Ueda.

Meanwhile shares in Danish drugmaker Novo Nordisk, which is struggling with competition for its anti-obesity treatments, fell 2.5 percent after it announced it will sharply cut prices for its flagship drugs in the US, announcing a 50 percent cut for Wegovy and 35 percent for Ozempic.

- Key figures at around 1450 GMT -

New York - Dow: UP 0.8 percent at 49,215.03 points

New York - S&P 500: UP 0.4 percent at 6,865.49

New York - Nasdaq Composite: UP 0.6 percent at 22,763.21

London - FTSE 100: UP 0.2 percent at 10,707.21

Paris - CAC 40: UP 0.2 percent at 8,515.62

Frankfurt - DAX: UP 0.2 percent at 22,763.21

Tokyo - Nikkei 225: UP 0.9 percent at 57,321.09 (close)

Hong Kong - Hang Seng Index: DOWN 1.8 percent at 26,590.32 (close)

Shanghai - Composite: UP 0.9 percent at 4,117.41 (close)

Euro/dollar: DOWN at $1.1772 from $1.1792 on Monday

Pound/dollar: DOWN at $1.3485 from $1.3492

Euro/pound: DOWN at 87.30 pence from 87.40 pence

Dollar/yen: UP at 156.09 yen from 154.68 yen

Brent North Sea Crude: UP 0.3 percent at $71.31 per barrel

West Texas Intermediate: UP 0.2 percent at $66.44 per barrel

burs-rl/rh

M.Fujitav--JT