چه چیزی بازارها را ترسانده است؛ در حالی که سهام، بازده اوراق خزانه‌داری و طلا همگی پیش از معاملات اروپا کاهش می‌یابند؟

It looks like Halloween is coming a day early for markets with investors getting quite the fright already as we look to wrap up the trading week. Both stocks and Treasury yields are falling together, with gold also struggling to catch a bid. That's a rather spooky combination to deal with.

So, what exactly is driving markets into this scary situation?

Well, the latest earnings from Amazon overnight have only added another skeleton to the closet after the company's massive AI spending bill overshadowed impressive cloud growth. Amazon shares are down 7% in after-hours trading, and that follows from the beating that tech shares took yesterday after Alphabet reignited fears of AI spending in the day before.

US futures are being dragged sharply lower today, with Nasdaq futures down 1.8% currently. And that is setting up a rather ominous backdrop ahead of European trading today.

But beyond the selling in tech, there's something else about the broader market moves worth noting. Why are Treasury yields continuing to fall when inflation risks remain elevated? And why exactly aren't lower yields doing much to offer support for tech stocks?

Perhaps the answer lies in the darker story brewing beneath the AI boom .

For all the excitement surrounding AI technology, investors are starting to question just how much money companies need to throw at it before seeing meaningful returns. And Alphabet and Amazon's latest results this week are hardly going to put those worries to bed.

And as AI credit risks continue to attract scrutiny , falling Treasury yields may be telling us something about investors seeking safety rather than celebrating lower borrowing costs.

As for gold, the inability for the precious metal to capitalise on the negative risk mood adds another twist to the overall picture. That could reflect month-end positioning or even liquidity pressures as stocks are being hurt badly while the bond market is responding more to safety flows rather than inflation risks. The latter is still very much in play as oil prices continue to stay more elevated this week.

So, where does that leave us ahead of European trading today?

It's a rather poor risk backdrop overall and one that could get uglier at any point in time. For me, I'd be watching whether the tech selloff spills over into broader equities more profoundly and whether Treasury yields will continue to fall alongside stocks. The latter will be a particularly worrying sight for broader markets if so.

As things stand, the real fright for markets may not be that the AI boom is running out of steam but that investors are finally starting to question the price of keeping it all going.

"It's all a fugazi. It's a wazi. It's a woozy. It's fairy dust. It doesn't exist. It's never landed. It is no matter. It's not on the elemental chart. It's not real." Said nobody. ;)

This article was written by Justin Low at investinglive.com.