Volkswacht Bodensee - Wall Street's AI-fuelled rally falters, oil slumps

Crude prices slumped after US President Donald Trump called on Saudi Arabia and OPEC to reduce oil prices.

Wall Street has been on a tear over the past week, with the S&P 500 setting a record high Wednesday in the wake of a massive AI investment announcement by Trump.

But the tech-heavy Nasdaq Composite dipped on Thursday and the S&P 500 edged higher without moving into record territory.

"There is some natural hesitation today given how far the market has come in just seven trading sessions and tariff uncertainty lurking in the background," said Briefing.com analyst Patrick O'Hare.

Furthermore the yield on 10-year US Treasuries edged up on Thursday.

Higher borrowing costs mean that companies, particularly tech firms, see their earnings compressed, with high stock prices compared to their earnings as a consequence.

"The stretched earnings multiple is a headwind running into an earnings reporting period that has high expectations going into next week's results from the likes of Microsoft, Meta Platforms, Tesla and Apple," O'Hare said.

Investors have largely welcomed the first few days of Trump 2.0 as he held off immediately returning to the hardball trade policies of his first term.

However, warnings that China, the European Union, Canada and Mexico could be hit by tariffs as soon as February 1 have given cause for concern.

"Investors are still weighing Trump's tariff talk, though history suggests his bark often echoes louder than his bite," said Matt Britzman, senior equity analyst at Hargreaves Lansdown.

Trump, addressing world business and political leaders at the World Economic Forum in Davos by video link, told them to manufacture their products in the United States or face tariffs.

He also urged Saudi Arabia and OPEC to bring down the cost of oil, sending global market prices for crude lower.

Trump also demanded that US interest rates come down.

Trading in Asia got a lift from Wednesday's Wall Street rally that saw tech titans including Nvidia, Microsoft and ARM surge after Trump announced a new $500 billion venture to build infrastructure for artificial intelligence in the United States.

Tokyo-listed SoftBank, named in the venture, extended the rally Thursday, piling on more than five percent and boosting Tokyo's gains.

Elsewhere, Chinese authorities unveiled measures to bolster the country's stock markets, including allowing pension funds to invest in listed companies and pushing firms to increase share purchases.

The measures provided some support with Shanghai's stock market advancing, but Hong Kong gave up early gains to end lower.

"Recent history would suggest Beijing will need to take more radical action if Chinese shares are to enjoy a sustained recovery," said AJ Bell investment director Russ Mould.

The yen edged up against the dollar ahead of the Bank of Japan's policy decision Friday, when many investors expect it to raise interest rates for the third time since March.

"Economic data continues to support the BoJ's case for a rate hike," said Gregor Hirt at Allianz Global Investors, pointing to upward momentum in core consumer prices.

In European equity trading, Frankfurt set a new record high and London set another closing record but short of its record. Paris also rose.

- Key figures around 1630 GMT -

New York - Dow: UP 0.5 percent at 44,391.70 points

New York - S&P 500: UP 0.2 percent at 6,096.57

New York - Nasdaq Composite: DOWN 0.2 percent at 19,975.85

London - FTSE 100: UP 0.2 percent at 8,565.20 (close)

Paris - CAC 40: UP 0.7 percent at 7,892.61 (close)

Frankfurt - DAX: UP 0.7 percent at 21,411.53 (close)

Tokyo - Nikkei 225: UP 0.8 percent at 39,958.87 (close)

Hong Kong - Hang Seng Index: DOWN 0.4 percent at 19,700.56 (close)

Shanghai - Composite: UP 0.5 percent at 3,230.16 (close)

Euro/dollar: DOWN at $1.0412 from $1.0425 on Wednesday

Pound/dollar: UP at $1.2343 from $1.2313

Dollar/yen: DOWN at 155.99 yen from 156.45 yen

Euro/pound: DOWN at 84.35 pence from 84.48 pence

West Texas Intermediate: DOWN 0.6 percent at $75.01 per barrel

Brent North Sea Crude: DOWN 0.4 percent at $78.66 per barrel

burs-rl/sbk

F.Mueller--VB