Suryaa Business Desk: Surya Global Economy & Markets Bureau, New York: Artificial intelligence (AI) and leading technology stocks witnessed heavy selling in international equity markets... Surya Global Economy & Markets Bureau, New York: Investors are turning to safer assets as artificial intelligence (AI) and leading technology stocks come under heavy selling pressure in international equity markets. The key US 10-year Treasury yields fell sharply to around 5 percent amid strong demand for US government bonds. It is noteworthy that the benchmark yields have reached such a low level after almost a month.
According to the fundamental market principle that if bond prices rise, yields will fall, large amounts of funds have flowed into the bond market to hedge against stock market losses. Investors worry over AI companies' high capital costs: Huge investments by tech giants to build artificial intelligence infrastructure and investors' doubts about the timing of their returns led to a sharp sell-off on Wall Street. Especially after the announcement of the results of the giant companies like Meta Platforms, the AI investment plans raised concerns in the market and the Chip Index and Nasdaq indices fell heavily. As billions of dollars of investments in the tech sector evaporated in moments, global fund managers prioritized purchases of risk-free US sovereign bonds to protect their portfolios.
Focus on Inflation, Crude Oil Prices, Fed Meet: While lower bond yields are generally a positive factor as interest rates on loans like home loans and car loans fall, rising international crude oil prices and geopolitical tensions in West Asia still keep the market under pressure. Along with this, the upcoming US Federal Reserve policy meeting and the release of inflation figures are likely to continue this type of fluctuations in the bond markets, Wall Street financial experts are analyzing.