Global markets experienced a sharp downturn on Friday as investor enthusiasm for Artificial Intelligence (AI) cooled and political maneuvers in Washington created fresh volatility. Asian stocks declined, precious metals retreated from historic highs, and energy prices fell as traders weighed the potential for de-escalation in the Middle East.
The AI Investment Dilemma
While healthy earnings from tech giants like Meta, Samsung, and SK hynix initially supported the sector, a recent announcement from Microsoft triggered a wave of skepticism. The tech giant reported a massive surge in AI infrastructure spending, reviving fears that the “payoff” for these multi-billion dollar investments may be further away than anticipated.
Market Impact:
- Microsoft Slump: The stock saw its worst performance since the COVID-19 era, dropping 12%.
- Bubble Fears: Analysts are increasingly concerned that tech valuations are overextended, leading to questions about a potential market bubble.
- Cloud Growth: Slower growth in Microsoft’s Azure cloud service further dampened investor confidence in the immediate monetization of AI.
Regional Market Performance
Asian and European markets struggled on Friday, influenced by domestic data and international speculation.
| Market Index | Performance | Closing/Current Level |
| Hang Seng (Hong Kong) | DOWN 2.1% | 27,387.11 |
| Shanghai Composite | DOWN 1.0% | 4,117.95 |
| Nikkei 225 (Tokyo) | DOWN 0.1% | 53,322.85 |
| FTSE 100 (London) | DOWN 0.2% | 10,150.97 |
| Dow Jones (New York) | UP 0.1% | 49,071.56 |
The “Trump Fed” Speculation
A major driver of Friday’s uncertainty is the expected announcement of a new Federal Reserve Chair. President Donald Trump is slated to name a successor to Jerome Powell, with speculation heavily favoring Kevin Warsh. Known for a more “hawkish” stance on interest rates, Warsh’s potential appointment has led traders to brace for tighter monetary policy.
Indonesia’s Market Warning
In Southeast Asia, Jakarta saw a slight recovery following a two-day rout. However, index compiler MSCI has issued a stern warning: if transparency regarding ownership is not improved by May 2026, Indonesia could be downgraded from “Emerging Market” to “Frontier Market” status, significantly reducing its weight in global indexes.
Commodities and Currencies
Precious metals and energy contracts experienced a reversal after a week of record-breaking activity.
- Gold & Silver: Gold fell to approximately $5,150 an ounce, down from a peak of over $5,595. Silver dropped to $106, following a high of $121.
- Oil Prices: Crude retreated by more than 1.5% as hopes grew for a diplomatic resolution between the U.S. and Iran. This follows a volatile session where prices spiked 5% after Trump warned of potential strikes.
- The Dollar: The U.S. currency saw a slight uptick, despite the President’s previous comments suggesting a preference for a weaker dollar to boost trade.
Washington Shutdown Watch
As the midnight deadline approaches, the U.S. Senate is racing to finalize a funding deal to prevent a government shutdown. The standoff centers on the administration’s aggressive immigration crackdown, leaving federal operations in a state of high-stakes suspense as the weekend nears.
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