Yesterday's session carried a risk-off tone, driven by an AI selloff and a partial rebound in oil prices. Technology equities tumbled, the Nasdaq dropped nearly 6% and dragged the S&P 500 to its worst session since April 2025. European stocks were comparatively resilient, insulated by their lower technology exposure.
Flight-to-safety flows put downward pressure on U.S. and German sovereign yields, while euro area peripheral spreads widened moderately. Investors scaled back their expectations for Fed rate hikes, with implied rates for end-2027 dropping to 4.25% from 4.40%. The euro fluctuated around $1.12 and the GBP weakened even as the BoE hiked rates to 4.00%.
In commodity markets, crude oil rebounded from Wednesday's lows, with Brent closing above $98 per barrel as the geopolitical risk premium reasserted itself. TTF natural gas also rose in sympathy with crude. Gold edged higher, drawing residual safe-haven demand.
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