Futures ticked up in Asian trading today but later flipped lower. Yesterday's S-1 filing from Anthropic briefly reignited optimism in the AI sector after recent turbulence. Asian indices gained about 0.7%, led by tech names in South Korea and Japan.
The rebound, however, faded quickly. Nasdaq 100 futures are now about 0.4% lower, and S&P 500 futures are off roughly 0.1%. European equities look set to open down about 0.5%.
Rising tech financing dominated sentiment. Meta said that it expects to raise up to $97.5 billion via common and preferred shares. Broadcom arranged roughly $63 billion in financing to buy chips. SpaceX signed lease agreements for equipment totaling about $40 billion. Anthropic's long-awaited S-1 positions it to become the first public pure-play developer of advanced AI models. The IPO will be an important test of investor appetite for AI after the chipmaker sell-off sparked by fears of overpriced valuations and massive capex. Not all headlines were positive: HSBC in Hong Kong plunged by more than 6% after weak results.
Note that this week's calendar is quite heavy. The Fed announces its interest rate decision on Wednesday. The same day, Alphabet and Microsoft are set to report. Amazon and Intel follow on Thursday. Investors will be focused on spending plans and, critically, whether those investments are generating returns. Some market participants remain cautious: while capital is returning to AI names, companies are simultaneously seeking massive new financing, and growing debt and cash burn at leading labs raise legitimate concerns.
Diplomatic activity in the Middle East offered a brief respite: delegations headed to Tehran in an effort to restart talks and avoid wider escalation, which initially eased oil. However, the relief proved short-lived. Brent has recovered its losses and is currently trading near $115.90/bbl, while gold sits around $4,005/oz after a difficult week.
All this indicates that the market is willing to buy into the AI narrative again, but it's doing so guardedly — with an eye on funding and upcoming earnings. In my view, until Alphabet, Microsoft, and Amazon demonstrate the returns from their AI investments, the tech rally will remain fragile. Expensive oil and the Fed's decision will make it hard for markets to relax. Strong results could revive chipmakers, while disappointing prints would likely revive the sell-off.
As for S&P 500 technicals, the immediate task for buyers is to overcome the resistance level of $7,679. That would signal upside and open the way to $7,698. Holding $7,718 would further strengthen bulls' positions. On a downside break, buyers should defend near $7,656. A break below that level would likely drive the index to $7,633 and open the path to $7,607.