Global Stocks Slide as AI Valuation Fears Spark Broad Tech Sell-Off

Economic

Stocks

Summary:

Global equity markets dropped sharply on Wednesday following a tech-led sell-off on Wall Street, as investors grew increasingly wary of inflated artificial intelligence (AI) valuations...

Wall Street Sparks AI Bubble Fears

The U.S. stock market experienced a notable decline, with the S&P 500 falling 1.17% and the tech-heavy Nasdaq Composite tumbling 2.04%. Investor sentiment soured amid growing skepticism over soaring valuations in the AI sector. Market participants are beginning to question whether current prices reflect realistic growth expectations or speculative enthusiasm reminiscent of past bubbles.

Several AI-focused firms particularly semiconductor companies and cloud-based software providers saw their share prices retreat sharply, with high-momentum tech stocks driving the broader market lower.

Asia Follows With Tech Weakness

The sell-off quickly extended to Asia, where regional markets mirrored U.S. losses. The Hang Seng Index dipped 0.06%, with tech and chipmaker stocks among the biggest losers. Market analysts highlighted that many Asian firms have become tightly linked to the global AI supply chain, including key players in hardware manufacturing, semiconductors, and software services. As such, a repricing of expectations in the U.S. sector directly impacts sentiment in Asia.

In South Korea and Taiwan both home to major semiconductor exporters investor caution deepened, with local benchmarks under pressure. The decline reflected not just valuation concerns but also worries about the sustainability of AI infrastructure spending into 2026.

Valuation Concerns and Bubble Talk Resurface

Fears of a speculative bubble in AI are not new, but recent earnings reports and investment trends have reignited the debate. While AI continues to show transformative potential, especially in enterprise productivity and consumer applications, investors are increasingly evaluating whether short-term revenue growth can support current stock prices.

Recent analyst notes suggest that some firms are trading at forward P/E multiples more than double their historical averages, without equivalent earnings growth visibility. These stretched valuations have become more vulnerable to macro headwinds like higher-for-longer interest rates, tighter financial conditions, and slowing global growth.

Wednesday’s market action suggests that investor enthusiasm for AI may be entering a more cautious phase, where fundamentals will face greater scrutiny. Whether this marks a healthy correction or the beginning of a broader tech downturn remains to be seen, but the sudden drop across global markets shows just how central AI valuations have become to current market narratives. Traders and portfolio managers may now need to reassess their exposure to high-growth, high-valuation assets in light of evolving macro and sector-specific risks.

Source: CNBC

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Gerik

Economic

Commodity

Inventory Surge Fuels Short-Term Pressure

Oil markets faced downward pressure after the American Petroleum Institute (API) reported a significant 6.5 million barrel increase in U.S. crude inventories, the largest build since late July. This unexpected surge raised concerns about oversupply in a market already grappling with excess capacity. West Texas Intermediate (WTI) approached $60 a barrel, while Brent hovered around $64, extending the losses from Tuesday’s trading session.

The upcoming release of official data by the U.S. Energy Information Administration (EIA) is highly anticipated, as it typically carries more market weight than the API report. Traders are closely watching whether the EIA will confirm the inventory build, which would likely reinforce the bearish momentum.

Global Market Selloff and Stronger Dollar Compound Losses

Beyond the oil-specific fundamentals, the broader market environment added to the pessimism. A global selloff in equities and a strengthening U.S. dollarnow at a five-month highsignaled increased investor caution. This “risk-off” sentiment not only dragged on oil but also affected other commodities, as capital flowed into safer assets amid global growth uncertainties.

Asia-Pacific equities were particularly hit, following declines in U.S. stock futures. This broader financial anxiety adds to fears that slower global economic activity could suppress energy demand into early 2026.

OPEC+ Output and Supply Glut Concerns Persist

Oil prices have fallen around 14% year-to-date, primarily due to rising supply from both OPEC+ and non-member producers. Although OPEC+, led by Saudi Arabia and Russia, decided on a modest output increase for December, the group indicated a potential pause on hikes in Q1 2026. Nevertheless, the market continues to grapple with fears of a persistent global glut, especially in the face of softening demand indicators from key economies.

Geopolitical tensions added a layer of complexity. Ukraine’s recent attacks on Russian oil facilities, including the Lukoil refinery in Nizhny Novgorod and other plants like Tuapse and Saratov, have triggered short-term supply disruptions. Russia’s seaborne exports declined in October, the steepest drop since January 2024, largely due to sanctions by the U.S. on Rosneft and Lukoil that led buyers like Inxzdia and China to reduce purchases.

However, energy traders remain skeptical about lasting supply loss. Gunvor CEO Torbjörn Törnqvist remarked that disrupted Russian oil eventually re-enters the market through alternative routes, reinforcing a long-standing view that geopolitical disruptions often have transitory price effects.

The latest drop in oil prices reflects a convergence of bearish short-term factorsrising U.S. inventories, a stronger dollar, global equity weakness, and near-term OPEC+ oversupply. While geopolitical tensions in Russia inject volatility, market sentiment appears more focused on immediate indicators of demand weakness and inventory surpluses. The upcoming EIA data will be a key test for the market’s next direction.

Source: Bloomberg

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Gerik

Economic

Sustained Expansion in Services Despite Weak Overall Growth

The RatingDog China Services Purchasing Managers’ Index (PMI) recorded a reading of 52.6 in October, slightly below September’s 52.9 but still indicating expansion for the tenth straight month. The figure surpassed Bloomberg’s economist forecast of 52.5, signaling resilience in the sector thanks to holiday-driven travel and household spending. This contrasts with weaker performances in manufacturing and construction, which continue to be weighed down by slowing investment and exports.

China’s October services activity received a timely boost from extended autumn holidays and the kickoff of its annual shopping festivals. While manufacturing and construction remain subdued, the services sector benefited from increased domestic travel and consumer spending, particularly in tourism and entertainment.

Despite a drag from the broader economy, services managed to hold momentum. However, employment in the sector continued to contract, and firms struggled with thinning profit margins, as highlighted by RatingDog founder Yao Yu.

Policy Focus on Domestic Demand

As global demand for Chinese exports softens and private sector investment falters, China is increasingly turning to services and domestic consumption as key growth drivers. Officials recently rolled out a series of measures to support the sector, including infrastructure investments and initiatives to promote consumer lending.

The government’s upcoming 2026–2030 Five-Year Plan also emphasizes expansion of public services and employment generation, although industrial policy and self-sufficiency in technology remain central strategic priorities.

Mixed Market Outlook and Structural Priorities

Despite recent policy efforts, major institutions remain cautious about the broader economic outlook. Bloomberg Economics points out that while cash incentives for families and seniors mark a shift in strategy, they are insufficient to spark lasting consumer confidence without long-term commitments.

Although full-year GDP growth of around 5% remains achievable, many analysts forecast only around 4% growth in coming quarters. Goldman Sachs has adopted a more optimistic tone, citing reduced trade tensions and a likely pause in tariff escalations, with Asia-Pacific Chief Economist Andrew Tilton noting that consumption is more a “nice to have” for Beijing, while manufacturing and technology continue to anchor long-term growth strategies.

October’s service sector data reflects a steady if fragile pillar in China’s economic landscape. While services are benefiting from consumer activity, the country’s reliance on industrial strength remains dominant. Future resilience in the services sector will depend on deeper reforms, sustained policy support, and a stronger rebound in consumer confidence.

Source: Bloomberg

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Gerik

Political

A Coordinated Democratic Resurgence

In what analysts are calling the Democrats’ strongest performance since their 2024 defeat to Trump, the party won high-profile gubernatorial races and down-ballot contests by framing the 2025 off-year elections as a referendum on Republican leadership. With economic affordability at the core of their messaging, Democrats flipped or held key positions in multiple states, capturing the public mood amid rising prices and a prolonged government shutdown now in its sixth week.

Former CIA officer and Congresswoman Abigail Spanberger decisively won Virginia’s governorship, campaigning on economic pragmatism and rejecting Republican culture wars. Her opponent, Republican Lt. Gov. Winsome Earle-Sears, centered her campaign on immigration and education, but ultimately failed to galvanize support amid mounting public frustration over federal dysfunction. Spanberger’s victory is especially notable in Virginia’s political landscape, where 11 of the last 12 gubernatorial contests have been won by the party not controlling the White House suggesting deep voter fatigue with Trump-led policy chaos.

In New Jersey, Mikie Sherrill, a Navy veteran and prosecutor, held the governorship for Democrats by defeating Trump-backed Jack Ciattarelli. Despite Ciattarelli’s appeal to working-class White voters and promises to cut taxes, voters favored Sherrill’s focus on childcare, public transit, and affordability.

Mamdani’s Mayoral Upset Marks Generational and Ideological Shift

In New York City, Assemblyman Zohran Mamdani, a self-described democratic socialist, became the city’s first Muslim and South Asian mayor after toppling former Governor Andrew Cuomo in the Democratic primary and defeating him again in the general election. His win highlights the growing traction of the progressive left in urban centers and their ability to mobilize around issues of housing, transit, and wealth inequality. Mamdani’s campaign a clear break from centrist Democratic establishment figures openly challenged billionaire wealth and won despite Trump’s vocal attacks.

A major structural victory came in California, where voters approved Proposition 50, a redistricting measure that adds five new Democratic-leaning congressional districts. Governor Gavin Newsom, seeking to counter Republican gerrymandering efforts in states like Texas, poured over $120 million into the campaign. The measure is expected to bolster Democratic chances in the 2026 midterms and possibly elevate Newsom’s national profile as he eyes future presidential ambitions.

Down-Ballot Gains Strengthen Democratic Infrastructure

Democrats also won judicial and utility commission races in Pennsylvania and Georgia by leveraging concerns over energy costs and public service accountability. These wins, though less visible, strengthen the party’s institutional footing ahead of 2026 and signal that economic issues resonate with voters beyond the coasts.

Exit polls in Virginia and New Jersey revealed a dissatisfied electorate: 60% of voters described themselves as either “angry” or “dissatisfied,” while only a third felt enthusiastic. CNN’s parallel polling indicated that more than half of voters intentionally cast ballots as a message to Trump, underscoring the symbolic weight of the election cycle.

Voter turnout was especially strong in urban hubs like New York City, where early voting hit record highs fueling Democratic margins and showing renewed engagement despite political polarization.

Republican Struggles and Trump’s Waning Influence

While Trump attempted to deflect blame for the GOP’s poor showing citing his absence from the ballot and the ongoing shutdown many Republicans, including gubernatorial hopeful Vivek Ramaswamy, issued public critiques. Ramaswamy stressed the need for the party to abandon identity politics and instead focus on economic messaging if it wants to remain competitive in 2026.

Trump’s efforts to reduce federal spending and push a hardline economic agenda have stalled due to the shutdown, which has not only furloughed hundreds of thousands of workers but also disrupted critical data releases. The economic toll is expected to grow if the standoff persists, further alienating swing voters.

Strategic Implications for 2026

These results carry significant implications for the upcoming 2026 midterms, with Democrats eyeing the House and Senate, both narrowly controlled by Republicans. The victories provide a roadmap for how the party can blend economic pragmatism with targeted progressive appeals to forge a cross-ideological coalition.

The success of moderate candidates like Spanberger and Sherrill alongside progressives like Mamdani illustrates both a broadening tent and an emerging strategy to appeal to suburban moderates and urban progressives alike. While ideological tensions remain within the Democratic ranks, the shared focus on affordability, stability, and rejecting Trumpism appears to be a unifying thread.

Abigail Spanberger summed up the sentiment in her victory speech:

“We chose our commonwealth over chaos.”

The 2025 off-year elections have become more than just a political checkpoint they are a decisive public rebuke of Donald Trump’s leadership and a rallying cry for Democrats looking to reclaim full control of Congress in 2026. With former President Obama back on the trail and high voter turnout in key battlegrounds, the party is signaling that it’s not only regrouping but redefining its path forward.

Source: Bloomberg

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Winkelmann

Forex

Commodity

Economic

Russia and Turkey are in talks to keep up the volumes of gas supplies from Gazprom PJSC as they negotiate the renewal of two major pipeline supply deals, according to people familiar with the matter.

The contracts between Russia's gas giant and Turkey's state company Botas for combined deliveries of as much as 21.75 billion cubic meters a year are set to expire on Dec. 31. Russia and Turkey are negotiating to keep the annual flows at about 22 billion cubic meters, the people said, asking not to be identified as the information isn't public.

Gazprom didn't immediately respond to a Bloomberg request for comment sent during a public holiday in Russia. Turkey's Energy Ministry didn't comment. Botas didn't reply to a query seeking comment.

Gas market watchers have been questioning the future of Russian gas flows to Turkey amid growing pressure from US President Donald Trump's administration to curb energy purchases that help the Kremlin fund its war on Ukraine. Following US sanctions on Russia's two biggest oil producers last month, Turkey's oil refiners have started cutting imports of Russian crude.

Turkey has previously pushed back on Western efforts to stop it from buying Russian gas, which is mostly traded through long-term contracts via extensive pipeline connections between the two countries. In September, however, Turkey agreed to a string of contracts to buy liquefied natural gas, including from the US. With Turkey's own production from the Black Sea set to grow, it may end up with more gas than it needs.

Turkey's large market has been a lifeline for Gazprom, which has all but lost the European gas market after the war triggered a push for diversification of supplies. This should give Turkey leverage to negotiate discounts in a renewal of supply deals.

Last year, Gazprom shipped 21.6 billion cubic meters to Turkey, according to Bloomberg calculations based on data from the nation's energy regulator EMRA. These volumes made Turkey the second-largest buyer of Russian pipeline gas after China, helping prop up Gazprom's financial results for the year.

By comparison, when shipments of Russian crude via Ukraine to Europe stopped early in the morning on Jan. 1, those volumes exceeded 15 billion cubic meters per year.

Piped gas flows from Gazprom historically dominated supplies to Turkey, the fourth-largest gas market in Europe and almost entirely dependent on imports. Iran and Azerbaijan have also provided significant shares of the total import mix.

Source: Bloomberg Europe

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James Whitman

Economic

Britain's regressive and arbitrary system of local property taxation is in need of a root-and-branch overhaul — and has been for decades. A swirl of speculation and background briefings has left little doubt that taxes on the most expensive homes will be increased in this month's budget. What's now under discussion looks more like a sticking plaster, though. Political pragmatism and fiscal pressures mean that's no surprise. It's still a missed opportunity.

Chancellor of the Exchequer Rachel Reeves sees new, higher bands of council tax as the best way to raise several billion pounds to help shore up Britain's public finances, the Financial Times reported at the weekend, citing people briefed on her thinking. Homes are currently grouped in bands from A to H based on valuations that were last updated in 1991. A targeted approach appears more likely than a full revaluation, the newspaper said, referencing a proposal by the Institute for Fiscal Studies to double levies on properties in the two highest existing bands, G and H, that could raise £4.2 billion ($5.5 billion).

Listen for the wails of southeast England's moderately wealthy homeowners if this is the plan that's adopted. The overwhelming majority of Band G and H properties are in London and the southeast, accounting for about 600,000 properties. So these owners will shoulder most of the burden if tax rates on this segment are doubled. Band H is the realm of the solidly affluent — this includes properties valued at more than £320,000 in 1991, which would translate to at least £1.5 million now (and more in London, where values have climbed more than sixfold in the past three decades). But Band G reaches into a much more ordinary population.

A quick perusal of nearby homes for sale on Rightmove in this columnist's outer London borough throws up several unremarkable-looking Band G properties on offer for around £900,000. By contrast, one semi-detached house advertised as being in Band D — three rungs below — is on the market for £1.075 million. This is a taste of the anomalies and random thresholds that a 34-year-old unreformed system can throw up. Houses can be substantially improved or extended — even demolished and rebuilt — without moving council tax bands.

There clearly isn't much to choose between homes at the bottom end of Band G and the grades directly below. Doubling the tax on Band G while leaving lower levels untouched would simply substitute one set of arbitrary and unfair results for another. These homeowners are likely to be relatively well off but not substantially different from their Band F and E cohorts — mostly salary-earning families with mortgages and children.

They would face a double hit. The annual Band G council tax charge in Barnet, for example, is £3,393. Paying that much again would be a meaningful change on its own, but there's also the effect on market prices to consider. Capitalize that ongoing liability at a rate of 4% and the implied decline in value is about £80,000 — a far from trivial impact for a property that may have cost around £1 million. Recent buyers may feel they have already paid for the privilege of living in a higher-value property via stamp duty, a transaction levy that steps up proportionally for more expensive purchases (the bill for a £1 million house would be close to £50,000).

Doubling rates on the top bands hails from the same theoretical stable as the "mansion tax," which helped to scupper then-Labour leader Ed Miliband's chances of becoming prime minister in 2015. The idea (which has been floated again in the runup to this budget) is intuitively appealing: Impose an annual levy of, say, 1% on the value exceeding £2 million of the most expensive properties — taking modest amounts from those who can clearly afford it. The proposal damaged Labour in London and the southeast after Conservative-supporting media painted it as anti-aspiration and speculated that the party would extend the tax down to properties valued at less than £2 million.

This wasn't an unfounded fear. The problem is that there are too few super-expensive properties to raise significant amounts of revenue — as we can see in the council-tax bands proposal. Band H properties account for only 0.6% of homes in England and Wales, and only 1.8% of those in London. The temptation will always be to move down the curve. Tax Policy Associates' Dan Neidle includes a calculator in his analysis of the proposal that helps to illustrate the point: If Band G tax is held steady, then the tax on Band H would need to rise to about seven times its current level to raise the £4.2 billion envisaged.

Splitting the upper echelon into more high-value bands doesn't solve this problem — any more than cutting Yogi Berra's pizza into more slices creates a bigger meal. "Dividing the top band into two is a lot of work for virtually no financial gain, and does not seem a sensible proposition," Tim Leunig, a professor at the London School of Economics and adviser to the former Conservative government, told me. Meanwhile, doubling tax for the top two bands would leave someone living in a £10 million house in Westminster paying less than than the occupant of a £1 million house on the edge of London and was "plain weird," he said.

The Guardian reported in August that the Treasury was studying Leunig's proposal for a proportional property tax that would replace council tax and stamp duty (a levy that's a drag on the economy because it deters people from moving house). In the event, it looks ready to settle for a simple cash grab.

There's no route to reform of UK property taxes that doesn't involve owners of more expensive homes paying more. But this can be done in a more rational, comprehensive and equitable manner. That carries political risk, but then what does a government with record-low popularity have to lose?

Source: Bloomberg

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Gerik

Economic

Rising Reserves: A 33-Month High

According to the Bank of Korea (BoK), South Korea’s foreign exchange reserves surged to $428.82 billion by the end of October 2025. This marks a $6.8 billion increase from the previous month and the highest level since January 2023, when reserves stood at $429.97 billion.

The steady five-month climb reflects both strategic macro-financial management and favorable global investment conditions, underpinned by rising returns on forex-denominated assets and active interventions to stabilize the won.

Key Components Behind the Growth

Despite an overall decline in the value of foreign securities particularly U.S. Treasury holdings, which fell by $460 million to $377.96 billion (still accounting for 88.1% of total reserves) the sharp uptick in foreign currency deposits offset the drop. Deposits jumped by $7.4 billion to $25.94 billion, suggesting a strategic pivot toward more liquid instruments in response to exchange rate volatility and market uncertainty.

Additional components included:

Special Drawing Rights (SDR): Stable at $15.71 billion, reflecting no major transactions with the IMF.

Gold Holdings: Unchanged at $4.79 billion, indicating no recent movement in bullion reserves.

IMF Reserve Position: Slightly declined by $80 million to $4.41 billion, possibly reflecting drawdowns or revaluation adjustments.

Strategic Drivers and Policy Tools

BoK attributed the increase in reserves to stronger investment returns on foreign assets and newly issued FX stabilization bonds, reinforcing the bank’s dual focus on wealth preservation and currency defense.

This rise comes in a context of relatively stabilized currency markets, where the Korean won has shown resilience despite global uncertainty around interest rates and trade flows. BoK’s approach appears to blend reserve diversification with tactical liquidity management to shield the economy from external shocks.

Global Position: 9th Largest Forex Holder

As of the end of September 2025, South Korea retained its position as the world’s ninth-largest foreign exchange reserve holder. Leading countries include: China, Japan, Switzerland, Russia, India

This ranking underscores Korea’s ongoing commitment to maintaining strong external buffers a critical safeguard given its trade-dependent economy and exposure to global capital movements.

South Korea’s increasing reserves signal enhanced confidence in macroeconomic fundamentals and policy foresight in managing both external debt and currency risks. However, the slight decline in U.S. securities and the reliance on deposits reflect a hedging strategy against duration risk, inflationary pressures, or geopolitical uncertainties.

If the current trend continues, Korea could surpass its January 2023 record as early as Q1 2026. However, global financial tightening, geopolitical shocks, or large-scale interventions could disrupt this momentum.

In sum, the BoK’s careful balancing of liquid and long-term instruments within its reserve portfolio highlights a pragmatic, risk-sensitive approach to currency defense and capital preservation in an evolving global landscape.

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