Bubble or no bubble?

Wall Street endured a bruising week after the Democrats' victory in the US midterm elections raised fears that AI data center construction projects could be delayed or scaled back. The Nasdaq 100 plunged more than 6% on Thursday, wiping $3 trillion off its market capitalization. European markets weathered the turmoil better, although they were hardly immune to the prevailing nervousness. Wall Street staged a rebound on Friday. Was it merely a technical bounce or the start of a more lasting recovery? Time will tell. Either way, investors have plenty to think about this weekend.

Weekly variations* HANG SENG 24,481  +5.1% SINO BIOPHARMACEUTIC... +16.18% HUA HONG GRACE SEMIC... +15.65% XIAOMI CORPORATION +14.73% CNOOC LIMITED -4.94% WEICHAI POWER CO., L... -6.63% LENOVO GROUP LIMITED -8.24% MSCI AC PACIFIC 250.94  -2.32% DOW JONES INDUST... 51,285.73  -0.94% NASDAQ 100 26,989.99  -4.91% GOLD US$4,067.71  +4.35% BRENT CRUDE OIL ... US$97.68  -12.37% EURO / US DOLLAR US$1.11  -0.15%

This Week's Gainers & Losers

Gainers AppLovin +71.21%: The mobile advertising platform soared after reporting results that comfortably beat expectations. Sequential growth picked up again, easing concerns that emerged over the summer about the effectiveness of its Axon algorithm. Fourth-quarter guidance also came in well above consensus estimates. Booking Holdings +8.46%: The online travel booking giant reported strong adjusted earnings and put numbers behind the early benefits of AI, including higher conversion rates and lower customer service costs. Analysts increasingly see AI as a growth driver rather than a threat to its business. IDEXX Laboratories +22.65%: The veterinary diagnostics specialist jumped after beating earnings expectations and raising its outlook. The company has maintained growth through pricing increases despite a decline in veterinary visits. The stock had been trading at heavily depressed levels. Unity Software +36.58%: The video game engine developer reported results well above expectations, driven by its AI-powered advertising platform, and posted its first GAAP profit since going public. Silver Lake and Saudi Arabia's sovereign wealth fund have also reportedly approached the company about a potential deal valuing it at around $25bn. Fiserv +25.71%: The payments technology company responded to pressure from activist investor Jana Partners with a sweeping restructuring plan, including 3,000 job cuts and a doubling of its cost savings target to $1bn. Take-Two Interactive +12.99%: The video game publisher is benefiting from preorders for Grand Theft Auto VI, scheduled for release on November 19, which have reportedly already reached $751m. Monday's quarterly results should provide more details. Losers Semiconductors and AI sector: The selloff accelerated as concerns about financing the AI boom were compounded by the Democrats' landslide victory in the midterm elections, raising fears of a slowdown in data center development. The retreat spread across risk assets, with investors shifting toward defensive stocks and assets less correlated with the broader market, while reducing portfolio beta, valuation exposure and volatility. The SOXX -13.13% index led the decline. Marvell Technology -28.11% was hit particularly hard, with its planned acquisition of Lumentum -35.94% adding another layer of uncertainty. Oil sector: Energy stocks slumped as oilfield services companies warned of soaring costs. The war in Iran, now in its ninth month, and threats to shipping through the Strait of Hormuz are disrupting equipment deliveries. Logistics costs have sometimes tripled, fuel costs have doubled, and labor expenses have risen by 30% to 40%. Service providers have largely had to absorb these increases. Baker Hughes -13.33%, Marathon Petroleum -16.19%, ConocoPhillips -11.53%, Phillips 66 -13.12% and ExxonMobil -11.42% were among the hardest hit. CVS Health -7.09%: The healthcare giant plunged after announcing plans to break itself up, just seven years after acquiring insurer Aetna. The split would separate its insurance and healthcare services businesses from its pharmacy chain. Even strong quarterly results failed to offset investor concerns about dismantling an integration that had required substantial investment.

Commodities

Nickel rises, copper and oil fall This week's standout was nickel, which rallied after a corruption investigation in Indonesia raised concerns about potential supply disruptions. The Attorney General's Office launched an investigation targeting several nickel operators controlled by businessman Arif Kurniawan. On Thursday, nickel hit a five-week high of $16,415 per metric ton on the LME. Oil, meanwhile, suffered a sharp correction following the political shift in the United States. The Democrats' decisive midterm victory fueled hopes of de-escalation in the US-Israeli conflict with Iran, raising the prospect of Middle Eastern crude returning to the market. The January contract fell 11.4% over the week to $98.20 a barrel. However, continued attacks on ships in the eastern Mediterranean limited the decline. Copper was heading for its worst weekly performance since March, dragged down by the rout in technology stocks. The red metal is seen as a barometer of demand for AI infrastructure, so the tech sector's reversal weighed on expectations for industrial consumption. The December contract was down 5.3% at $6.25 a pound. Gold, meanwhile, held up well, gaining 1.5% to $4,069 an ounce. A dip below $4,000 earlier in the week triggered physical buying in India and brought Chinese buyers back into the market.

Macroeconomics

Macro So much happened this week that the jobs report almost took a back seat. Yet the numbers were remarkable, once again highlighting the strength of the US economy. Employers added 165,000 jobs in October, more than double the 70,000 expected by economists. On top of that, revisions to the previous two months added another 84,000 jobs. As a result, the unemployment rate fell from 4.2% to 4.1%. Traders responded by increasing their bets on further Federal Reserve rate hikes. Crypto Bitcoin (BTC) continued its slide this week, following Wall Street lower. It fell 3.15% to $75,700, marking its fifth consecutive weekly decline and bringing its cumulative loss over that period to 12%. The same trend is visible in spot Bitcoin ETFs, which have recorded $1.7bn in net outflows over the past five weeks. After last week's record-breaking Binance hack, estimated at more than $6bn, Crédit Mutuel Arkéa became the latest target of hackers. This week, they reportedly stole $100m, partly using blockchain networks to move the funds. To make matters worse, technology stocks plunged on Wall Street, adding to the pressure on cryptocurrencies, which often move in tandem with tech shares, particularly those linked to AI. As usual, other cryptocurrencies followed Bitcoin lower this week. Ether (ETH) fell 1.5% to $2,240, Solana (SOL) dropped 4.6% to $90, and Binance Coin (BNB) lost 2% to $695.

The third-quarter earnings season has been largely overshadowed by the turmoil surrounding artificial intelligence. The return of a Democratic majority in Congress, combined with growing public opposition to data centers across the US, has raised concerns about tougher times ahead for the main driver of global stock market gains. Although monetary policy has taken something of a back seat, Tuesday's release of the October US inflation report remains next week's most important economic event. The earnings calendar will be lighter next week, but several major companies are still due to report, particularly those benefiting from the AI boom. Investors will be watching SoftBank, Infineon, Siemens Energy, Cisco, CoreWeave, Nebius and Applied Materials for signs that the sector's outlook remains solid. Have a great weekend from all of us on the editorial team.

Things to read this week

What if the best AI trade was a German software company from the 1970s? Did you think AI had buried old-timers like SAP and IBM? Think again: while Silicon Valley burns through its cash, the veterans are quietly getting back in the... Read more Data Centers After the Midterms: Is the AI Trade Really at Risk? The Democrats' victory in the US elections is raising new uncertainties over data center construction. After a spectacular correction on Wall Street, investors... Read more ETF Monthly: The Market Starts Playing Defense Over Attack AI sent the bill, energy and healthcare absorbed the rotation, and gold tumbled. A look back at ETF news and performance, plus our pick of themes and regions. Read more

*The weekly movements of indexes and stocks displayed on the dashboard are related to the period ranging from the open on Monday to the sending time of this newsletter on Friday. The weekly movements of commodities, precious metals and currencies displayed on the dashboard are related to a 7-day rolling period from Friday to Friday, until the sending time of this newsletter. These assets continue to quote on weekends.