Stocks Struggle as US Rate Worries and Tech Rally Fears Weigh on Markets

Stocks Struggle on US Rates, Tech Rally Fears as Global Markets Lose Momentum

Global financial markets ended the week on a shaky footing as stocks struggle on US rates, tech rally fears continued to unsettle investor sentiment. Renewed uncertainty over the US Federal Reserve’s interest rate path, combined with escalating concerns about overstretched tech valuations, weighed heavily on major indices across Asia, Europe, and the United States.

Despite a modest uptick in the Nasdaq following Thursday’s heavy selloff, most global markets slipped into the red. Analysts said the combination of rate doubts, political developments in the UK, and fragile investor confidence in high-growth AI stocks sparked a risk-off mood that dominated Friday’s trading session.

Wall Street Wavers as Investors Doubt December Fed Rate Cut

Even in the US, where earnings resilience has helped cushion markets for much of the year, stocks struggle on US rates, tech rally fears became the defining theme of the day. The Dow fell 0.7 percent, the S&P 500 dropped 0.1 percent, and only the Nasdaq managed to stay in positive territory, rising 0.1 percent after Thursday’s bruising tech selloff.

Markets have been pricing in a December rate cut for months, but recent commentary from Federal Reserve officials has cast fresh uncertainty. Several policymakers signaled discomfort with easing monetary policy while inflation remains elevated, prompting traders to scale back expectations.

Jim Reid, managing director at Deutsche Bank, described the week as “volatile,” noting that relief following the end of the US government shutdown was overshadowed by renewed anxiety around AI valuations and the Fed’s next move. Fed chair Jerome Powell’s earlier statement that a December cut was not “a foregone conclusion” continues to echo across the market.

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Tech Valuations Trigger Global Ripple Effect

The tech sector, which fueled markets to record highs earlier this year due to an AI-driven surge, has begun to stumble. According to analysts, stocks struggle on US rates, tech rally fears because AI optimism may have pushed valuations beyond sustainable levels.

Fawad Razaqzada of StoneX said tech stocks had seen “an extraordinary run” since April. “Valuations look overstretched,” he said, adding that while a full correction may not be imminent, markets are likely to remain jittery. That sentiment played out globally, with Asian markets leading declines.

In Tokyo, the Nikkei 225 fell 1.8 percent, Hong Kong’s Hang Seng dropped 1.9 percent, and Shanghai slid 1.0 percent as investors reacted to Wall Street’s tech weakness. European markets followed the same trend, with Paris slipping 0.8 percent and Frankfurt losing 0.7 percent.

UK Markets Slide After Reports on Scrapped Tax Plans

London’s FTSE 100 suffered one of the sharpest declines of the day, falling 1.1 percent. Sterling also weakened after reports emerged that UK finance minister Rachel Reeves had scrapped plans to raise income taxes in her upcoming budget.

The news intensified concerns about the UK’s public finances, especially after months of fiscal pressure and persistent inflation challenges. Analysts warned that the removal of revenue-raising measures could complicate the government’s financial roadmap.

Oil Prices Rebound More Than Two Percent on Russian Supply Risks

Amid the turbulence in equities, oil markets saw a sharp rebound. Brent crude rose 2.2 percent to $64.39 per barrel, while West Texas Intermediate jumped 2.4 percent to $60.09 per barrel. Analysts attributed the recovery to renewed supply concerns linked to Ukrainian strikes on Russian energy assets and fresh US sanctions targeting major Russian producers.

The International Energy Agency flagged new risks to Russian output just a day earlier, heightening fears of supply disruptions in an already tightly balanced market.

Markets Await Delayed US Economic Data After Shutdown

Adding to the uncertainty, investors are awaiting key US economic data—including jobs and inflation figures—that were delayed due to the government shutdown. While some of the upcoming data sets may be incomplete, traders say they will still serve as important indicators of the economy’s underlying strength.

With stocks struggle on US rates, tech rally fears dominating market sentiment, the delayed data could influence rate expectations and shape market direction in the coming weeks.

A Jittery Finish to a Turbulent Week

Global markets ended Friday in a risk-off mode, reflecting a broader loss of confidence after months of optimism built around falling rates and AI-powered gains.

Joshua Mahony of Scope Markets said the “tech-sector rout from Wall Street spilled across the globe,” reinforcing just how sensitive markets remain to shifts in the high-growth sector.

As the week closed, investors were left navigating a landscape defined by conflicting signals—cooling economic optimism, fluctuating rate expectations, and renewed scrutiny of tech valuations.

With central bank decisions looming and geopolitical risks weighing on energy markets, investors appear braced for more volatility ahead.

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