About $500 billion vanished from Alphabet's market cap on Friday after AI-related spending worries triggered a worldwide stock sell-off. Google's parent saw its shares drop 12.6% on Wall Street and slip further after hours as cash flow turned negative from AI infrastructure investment.

Investors focus on what AI spending will earn

The pressure spread to other big tech firms, with Intel sliding 23% in after-hours trading and Amazon down 7%. Recent earnings heightened doubts about whether money poured into data centres and computing hardware will generate sufficient returns.

Pepperstone analyst Chris Weston said investors are more concerned about the payoff for shareholders from AI outlays than the firms' ability to fund them. He added that a race to build infrastructure could lift industry costs, making smartphones and PCs pricier and dampening demand.

Stock market losses spread across regions

Futures pointed to more weakness, and Asian markets posted sharp falls. Chinese equities also felt strain from fears that weaker demand for semiconductors and data-centre gear could hurt earnings.

  • Nasdaq 100 futures fell 1.9%, while European stock futures slipped 0.5%.
  • South Korea's KOSPI dropped over 3%, taking its October loss to nearly 16%.
  • Japan's Nikkei slid more than 2% and neared a monthly decline of about 5%.
  • China's CSI300 headed toward its biggest monthly drop in a decade.

Government debt attracts buyers

Investors turned to U.S. Treasury bonds, cutting exposure to riskier assets. During Tokyo trading, the benchmark 10-year yield fell more than seven basis points to 4.91%, marking an October decline of roughly 37 basis points - the steepest monthly fall since December 2023.

The two-year yield dropped over eight basis points to 4.57%. Lower yields boost bond prices, indicating stronger demand for government debt.

Futures also hinted at reduced expectations for further U.S. rate hikes. The Federal Reserve kept rates unchanged on Wednesday without signaling when the next increase might come.

Currencies and Japan's policy decision

The yen modestly firmed to 157.20 per dollar, while the Swiss franc hovered near a one-month high at 0.8213 per dollar. The euro rose 0.1% to $1.1194, though it still headed for a monthly loss of over 1%, its second straight monthly decline.

The Bank of Japan left its policy rate unchanged but announced it would accelerate exchange-traded-fund sales next year, weighing on Nikkei futures. Ongoing focus on inflation risks also raised expectations of another rate rise as early as December.

David Chao, Invesco's Asia-Pacific global market strategist, said faster asset sales could initially unsettle markets while also showing the central bank's confidence in Japan's economy and financial conditions.

Cryptocurrency breach and oil supply concerns add pressure

A reported $6.3 billion security breach at Binance added uncertainty, prompting sales of digital assets and crypto-related stocks. Bitcoin fell to a six-week low before partially recovering to $78,171.16, down 0.9%.

Geoffrey Kendrick, head of digital assets research at Standard Chartered, warned that pressure may continue until details of the breach and the status of frozen assets become clearer.

Oil prices rose on Friday, on track for a fourth consecutive monthly gain, as an attack on a tanker in the Strait of Hormuz revived fears of energy supply disruptions amid the ongoing U.S.–Israeli conflict with Iran.