The Japan Times - Stocks diverge as AI fears cloud US rate cut

Major European indices gained nearing the halfway mark, after Asian markets finished mixed.

The Fed delivered its third straight cut to borrowing costs on Wednesday, but signalled that it could hold off further reductions in the coming months.

"Even as investors were reassured by the Fed's latest rate cut, familiar concerns about AI are still very much top of mind right now," said Deutsche Bank managing director Jim Reid.

Those concerns were reignited after Oracle reported quarterly revenue that fell short of lofty expectations.

Shares in the Texas-based company fell more than 10 percent on Wednesday as it also revealed a surge in spending on data centres to boost AI capacity.

Investors are wary of the massive investments tech companies are making in artificial intelligence models and infrastructure, wondering how and when they will pay off

Markets globally suffered a wobble last month with investors increasingly worried over the vast sums poured into AI, with US chip titan Nvidia becoming the world's first $5 trillion company in October.

Some observers have warned of an AI bubble that could burst and cause a market rout.

Russ Mould, AJ Bell investment director, noted that the fanfare around rate cuts was short-lived.

"Investors have shrugged off the Fed's latest reduction in US borrowing costs as it is becoming harder to guess where rates might go next," he added.

The latest cut in borrowing costs -- to their lowest level in three years -- comes as monetary policymakers try to support the US jobs market, which has been showing signs of weakness for much of the year.

Concern about the labour market has offset persistently high inflation, with some decision-makers confident the impact of US tariffs on prices will ease over time.

Traders have lowered their expectations for the number of Fed cuts in 2026 after the bank's statement used language used in late 2024 to signal a pause in more rate cuts.

Two members voted against the 25-basis-point cut, though one -- Trump appointee Stephen Miran -- voted for a 50-point cut.

Elsewhere, shares in Jingdong Industrials -- the supply chain unit of Chinese ecommerce titan JD.com -- briefly slipped as much as 10 percent on the firm's debut in Hong Kong, having raised more than US$380 million in an IPO.

Silver hit a fresh record high of $62.8863, having broken $60 an ounce for the first time this week on rising demand and supply constraints.

India's rupee hit a fresh record low against the dollar on delays to India securing a trade deal with the United States to cut tariffs.

- Key figures at around 1110 GMT -

London - FTSE 100: UP 0.2 percent at 9,670.91 points

Paris - CAC 40: UP 0.5 percent at 8,063.16

Frankfurt - DAX: UP 0.1 percent at 24,161.95

Tokyo - Nikkei 225: DOWN 0.9 percent at 50,148.82 (close)

Hong Kong - Hang Seng Index: FLAT at 25,530.51 (close)

New York - Dow: UP 1.1 percent at 48,057.75 (close)

Shanghai - Composite: DOWN 0.7 percent at 3,873.32 (close)

Dollar/yen: DOWN at 155.83 yen from 155.92 yen on Wednesday

Euro/dollar: UP at $1.1712 from $1.1693

Pound/dollar: DOWN at $1.3379 from $1.3384

Euro/pound: UP at 87.56 pence from 87.36 pence

Brent North Sea Crude: DOWN 1.4 percent at $61.33 per barrel

West Texas Intermediate: DOWN 1.4 percent at $57.62 per barrel

S.Ogawa--JT