European stocks were little changed Wednesday as concerns over artificial intelligence disruption continued, but S&P 500 futures edged higher as investors awaited U.S. jobs data later in the day.
There may be a shift in investor thinking since Prime Minister Sanae Takaichi won a landslide victory in Sunday’s election, with the U.S. dollar falling for the fourth straight session and the yen extending its gains.
The European benchmark STOXX 600 index was almost flat last time out. Tech stocks were hurt by a decline in French software maker Dassault Systèmes as concerns about artificial intelligence disrupting companies from insurance companies and software makers to asset managers simmer.
“We’re now seeing investors become much more discerning in their choices in the AI space,” said Aneeka Gupta, equity and products strategist at WisdomTree.
Germany’s DAX fell 0.14%, while Britain’s FTSE 100 rose 0.72%.
U.S. S&P 500 futures rose 0.15%, while futures on the tech-heavy Nasdaq rose 0.1%.
Investors assess the impact of AI
Despite concerns that AI will hurt certain sectors, benchmark stock indexes continue to hover near record highs as investors move toward companies they see as less likely to be adversely affected.
The S&P closed 0.3% lower on Tuesday, less than 1% below its January high, even as concerns that new AI models could shake up the industry reignited and asset managers suffered losses.
Europe’s STOXX 600 and the UK’s FTSE 100 both hit record highs earlier this month.
“Large language models cannot simply create substitutes for medicines or raw materials,” said Delen Nathan, head of equity research at Hargreaves Lansdown. “The surge in demand for energy and rare earths could be seen as a positive for some key industries.”
US Key Jobs Data Coming Soon
Data to be released at 8:30 a.m. ET (1330 GMT) is expected to show U.S. nonfarm payrolls rose by 70,000 last month, after increasing by 50,000 in December.
But analysts say annual benchmark salary changes could reduce last year’s job growth by 750,000 to 900,000 positions. The report was originally scheduled to be submitted last Friday but was delayed due to the government shutdown.
Data on Tuesday showed U.S. retail sales were unexpectedly flat in December, prompting traders to increase bets that the Federal Reserve will cut interest rates later this year.
The benchmark 10-year Treasury yield fell to a one-month low of 4.129% on Wednesday, after falling 5 basis points on Tuesday.
When the yen shines, the dollar dies
A possible worsening economic outlook and a rebound in the yen weighed on the dollar on Wednesday, with the main index down 0.34% against the dollar to 96.58, its lowest in nearly two weeks.
Asian trade was light due to a Japanese holiday, but the yen rose for the third straight session to 153.13 yen to the dollar, prompting traders to debate whether it was getting a boost from Tokyo or taking advantage of the dollar’s weakness.
It has gained about 2.5% against the dollar since Mr. Takaichi won a landslide victory on Sunday, disrupting some expectations that concerns about Mr. Takaichi’s stimulus plan would continue to put pressure on the currency and bonds.
“The fact that she won in such a landslide in some ways makes policy clearer for investors,” said Mr. Gupta, adding that the threat of government intervention aimed at strengthening the yen remained in the background.
Nikkei futures rose on Wednesday, driven by gains in Asian stocks, even though spot markets were closed for the holiday.
Gold rose over $5,000 an ounce, while Bitcoin fell 2% to around $67,000.
(Reporting by Harry Robertson in London and Tom Westbrook in Singapore; Editing by Kim Cogill, Joe Bavier and Alex Richardson)
