Global stock markets faced widespread declines Friday,driven by a confluence of factors including renewed concerns over artificial intelligence investments,geopolitical developments,and a potential shift in U.S. monetary policy. The downturn extended across Asian markets, where technology stocks were particularly hard hit, and rippled through commodity prices as oil and precious metals also saw significant losses. Investors are closely watching for signals regarding the Federal Reserve’s future direction as President Trump considers a new nominee to lead the central bank.
Global stock markets experienced a volatile session on Friday, as investors weighed shifting geopolitical tensions, recent earnings reports from major companies, and the outlook for potential interest rate cuts in the United States.
Following a strong start to the year fueled by renewed optimism surrounding the artificial intelligence (AI) sector, stocks retreated last week as traders reassessed the substantial investments flowing into the space and questioned the timing of potential returns. This shift in sentiment has raised concerns about a possible tech bubble, reminiscent of the inflated valuations seen in previous years.
Adding to the downward pressure, Microsoft announced plans to increase spending on AI infrastructure, reigniting worries that companies may face a considerable wait before realizing a return on their AI investments.
Asian markets led the decline, with Seoul’s stock exchange – which has seen record gains this year driven by its major technology companies – falling more than 5%. Chipmaker SK Hynix shed 8% of its value, while market leader Samsung Electronics dropped over 5%.
The Tokyo Stock Exchange, also home to several large technology firms, lost more than 1%, and Taipei, where TSMC – a leading chip manufacturer – is based, declined by over 2%. Similar losses were reported in Hong Kong, Shanghai, Sydney, Singapore, Wellington, Manila, and Bangkok.
Oil Prices Decline
Easing tensions between the U.S. and Iran contributed to a sharp drop in oil prices. Both Brent and West Texas Intermediate (WTI) futures fell more than 4% after President Donald Trump indicated he anticipates reaching an agreement with Tehran, following warnings from Iran that any attack on the Islamic Republic would provoke a regional conflict.
Washington has recently criticized Iran’s leadership for its forceful response to protests against the country’s theocratic regime. Trump had previously threatened military action and ordered the deployment of an aircraft carrier to the Middle East. The U.S. President has also sought a deal regarding Iran’s nuclear program.
The decline in oil prices was also supported by a strengthening dollar, which gained ground following news that Donald Trump intends to nominate Kevin Warsh as the next head of the Federal Reserve. Trump stated that the former Morgan Stanley investment banker and Federal Reserve Board member would be “one of the best” chairmen in its history.
Traders view Warsh as a staunch inflation hawk, leading to expectations of a tighter monetary policy that would further bolster the dollar. The nomination also eased concerns about the independence of the Federal Reserve, following a series of attacks by Trump on current Chairman Jerome Powell over his reluctance to quickly lower interest rates.
Precious Metals Fall on Fed News
The announcement of the potential new Federal Reserve chairman triggered a sell-off in precious metals. Gold prices briefly plummeted as much as 12%, while silver fell over 30% on Friday. The downward trend continued on Monday, with gold dropping as much as 6% to $1,586 per ounce and silver briefly falling around 11% to $15.75 per ounce. While both metals saw a partial recovery, they remained well below last week’s record highs of $2,072 and $25.14 respectively.
