Morning Bid: All eyes on AI

A look at the day ahead ‌in European and ​global markets ​from Ankur Banerjee

Markets are basking in the afterglow of the blockbuster US IPO filing of Claude-developer Anthropic that has lifted the mood weighing on investor sentiment regarding ‌the debt-fuelled AI trade.

Asian stocks took cues from Wall Street as investors cheered ⁠Anthropic unveiling its US initial public offering paperwork on Monday, a much-awaited filing that comes as scrutiny over huge AI ‌spending has surged and worry over ‌fundraising swirled.

The IPO filing didn't reveal anything we didn't know. Eye-popping revenue growth. Check. Staggering loss. Check. Risk factor detailing possible end of the world as we know it. Erm, also ​check.

Not to be outdone, Facebook parent Meta Platforms plans to raise up to a record $95 billion to fund AI infrastructure expansion. And SpaceX said an affiliate of Apollo Global Management will ⁠buy AI chips and server hardware and lease them to the rockets-to-AI firm, in a deal with total principal payments of about $40 ​billion.

While the fundraising has allayed some worry, it also adds to concern about the incredible capital needed for AI infrastructure and how quickly it may ​become profitable. Just last week, the cost of insuring ‌Meta's debt against default touched an all-time high.

For now, traders have their risk-on hat on, taking South Korea's KOSPI, the epicentre of the AI boom in ⁠Asia, 3.6% higher in its biggest one-day jump since early September. The index, dominated by AI chip bellwethers Samsung Electronics and SK Hynix, is still set for a 17% decline in October, underscoring the AI jitters.

The ⁠strong start for risk assets on Tuesday sets the stage for a pivotal week where earnings from AI hyperscalers ​and policy decisions from major central banks will set the tone for trading for the rest of the year.

Market watchers expect policymakers in New Zealand and Canada to hike interest rates by 25 basis points, and those ‌in the US, euro zone and Japan to keep them on hold but signal possible increases in December.

Investors have been focusing on AI fear recently, ‌shrugging off inflation concern and running for the safety of government bonds, especially Treasuries. That has pushed the ⁠yield on the 10-year note below 5% ‌but perhaps cautionary words from ​central bankers might stoke inflation worry too.

Key developments that could influence markets on Tuesday:

• October consumer confidence for France

• Novartis earnings

(By Ankur Banerjee in Singapore; Editing by ‌Christopher Cushing)

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