(April 29) : Stocks in Asia are set for a subdued start after a tech-led selloff dragged down US benchmarks, as doubts resurface over whether massive spending in artificial intelligence will pay off — just as traders brace for a wave of megacap earnings.
Equity futures signaled Sydney will open lower, while Hong Kong is set for a modest gain. Tokyo is closed for a holiday. S&P 500 contracts were steady after the US benchmark dropped from a record following a news report that OpenAI failed to meet its own goals for new user acquisition and sales. That fueled worries the firm may struggle to support its AI infrastructure spending — which saw partners such as Oracle Corp. and CoreWeave Inc. slump.
OpenAI missed several sales targets after rival Anthropic PBC gained ground in the coding and enterprise markets, the Wall Street Journal reported. Stocks remained lower even as the ChatGPT creator pushed back against those concerns, saying its consumer and enterprise businesses are “firing on all cylinders.”
That all came as big techs representing about a quarter of the S&P 500’s value get ready to release their earnings. Alphabet Inc., Microsoft Corp., Amazon.com Inc. and Meta Platforms Inc. are set to report Wednesday, followed by Apple Inc. a day later.
Tech earnings have been largely shielded from the disruptions of the Iran war. The sector’s results are expected to have grown 41% in the first quarter, according to data compiled by Bloomberg Intelligence.
Elsewhere, US oil was little changed in early trading on Wednesday, after gaining more than 5% in the week’s first two sessions on concern over a protracted peace process that could keep the Strait of Hormuz shut for an indefinite period. The recent rally has curbed expectations for Federal Reserve interest-rate cuts and boosted the dollar and Treasury yields. Gold was stable after losing almost 2% on Tuesday.
See also: US futures gain, oil falls on signs of Iran talks
President Donald Trump said Iran has asked the US to lift a naval blockade of the waterway while the two sides negotiate an end to the two-month war. Mediators in Pakistan expect Tehran to submit a revised proposal in the next few days, CNN reported.
Worries over how the conflict might impact inflation — alongside a seemingly stable labor market — will likely keep Federal Reserve policymakers on the sidelines for a third straight meeting. Short-dated Treasuries fell.
Eyes will also be on Australian economic data due later Wednesday. Inflation is likely to show a sharp acceleration in the first quarter, driven largely by higher fuel costs from the Iran war shock, according to Bloomberg Intelligence.
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