AI Jitters Continue to Roil Wall Street

Markets saw continued pressure Thursday as broader AI related fears continued to roil Wall Street. A selloff of shares in US companies perceived to be under threat from artificial intelligence spread across sectors, including more insulated corners of the market like industrials, to send all market gauges lower. Technology names, such as Cisco., AppLovin and Tyler Technologies led the decline. Cisco plunged 12% as investors are concerned hardware and memory-chip prices are weighing on the company’s outlook. Consumer staples and utilities were the top-performing sectors as investors continued to pile into defensive groups. Raphael Thuin, Head of Capital Markets Strategies at Tikehau Capital, joins Bloomberg Businessweek Daily to discuss. He speaks with Carol Massar and Tim Stenovec. Emerging-market currencies trimmed losses on Friday after tame US inflation data fueled expectations of interest rate cuts this year from the Federal Reserve.

A gauge for currencies in the developing world pared losses, with some currencies, including the highly liquid Mexican peso, hitting highs for the session immediately after the figures were released. US Treasuries jumped and investors priced in higher expectations that the Fed will lower interest rates three times in 2026.

Read more: Traders Price 50% Odds of Third Fed Rate Cut as Inflation Ebbs

“Inflation is inching down, which could put cuts back on the table in the short term,” said Marco Oviedo, senior strategist and XP Investimentos. “This will give support to EM.” Gold clawed back some losses after a sudden selloff in the previous session, with dip-buyers snapping up the metal ahead of key US inflation data.

Bullion rose as much as 1.4% on Friday, having lost 3.2% in the previous session – the biggest one-day fall in a week. That decline accompanied jitters on Wall Street, where prices buckled across asset classes on concern over the impact of AI on companies’ earnings. The pullback in gold may have been amplified by margin calls and algorithmic trading. The shift in sentiment started hitting Asian tech companies after the AI-fueled fallout on Wall Street this week.

“Asian stocks retreated from record highs as the concerns over shrinking margins in the tech sector pushed investors toward the safety of government bonds before the key US inflation data,” analysts at OTP Bank Nyrt., Hungary’s largest lender, said.

Before the latest turn lower, emerging-market equity funds attracted a second week of inflows, drawing $13.8 billion in the week through Feb. 11, Bank of America Corp. said, citing EPFR Global data. EM debt flows also resumed at $2.3 billion, it said.

“Focus now shifts squarely to the US CPI release later today, which is likely to be the next key catalyst for rates and FX markets,” Lloyd Chan, currency strategist at MUFG Bank Ltd., wrote in a note. “The main risk to the recent strength in Asian FX would be a materially hotter-than-expected US CPI print, which could trigger a renewed lift in the US dollar.”

The Hungarian forint gained for a second day against the euro as bullish trades ahead of parliamentary ballot due in April helped outweigh Thursday’s inflation data, which pointed toward a potential cut in the benchmark rate later this month.

“We believe this will remain the narrative until the elections, where the market takes every opportunity to take new long HUF positions,” ING Bank strategist Frantisek Taborsky said in a note.

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