AI stocks steady after $3tn wipeout as oil slide lifts Nasdaq 1.2%

Roughly $3 trillion has been erased from the Nasdaq Composite since its peak early last month, and Monday's opening bell was the first test of whether the selling had run its course. The tech-heavy index rose 1.2 per cent and the S&P 500 added 0.7 per cent as falling oil prices lifted investor sentiment, a day after the Nasdaq slipped 3.5 per cent on Friday to close its worst month in more than a year.

The rebound was led by the Magnificent Seven. Amazon gained 4.5 per cent, recovering from a decline triggered by weaker than expected sales, while Nvidia rose 1.9 per cent and Microsoft 0.6 per cent. Intel did not join in: the chipmaker, which led Friday's losses with a 28.5 per cent fall after a gloomy forecast, slipped a further 2.2 per cent.

Ajay Rajadhyaksha, global chair of research at Barclays, told clients the "big call now is whether recent weeks are the first signs of an impending AI collapse", though he added that "in general, earnings have remained healthy". Saxo market strategist Neil Wilson said Asian tech stocks were "stabilising", with South Korea's blue-chip index up 2.2 per cent on gains of 3.1 per cent at Samsung Electronics and 3.8 per cent at SK Hynix, Hong Kong's Hang Seng up 0.4 per cent and the Shanghai Composite up 1.1 per cent. Japan's Nikkei 225 was a soft spot, down 0.3 per cent, as memory-chip maker Kioxia fell 15.7 per cent after warning that demand for its products is beginning to cool; SoftBank, an investor in OpenAI, fell 1.5 per cent, taking its losses to 51 per cent from its June peak.

The recovery rode on energy markets. Brent crude fell 6.9 per cent to $106.4 a barrel after reports that the White House favours extending diplomatic avenues with Tehran ahead of the US midterms before considering military escalation, according to Patrick Munnelly, partner at Tickmill Group. Attention now turns to Tuesday's midterm vote, with polls putting Republicans at risk of losing both the House of Representatives and the Senate. Jason Hollands, managing director of Bestinvest, warned that the Democrats' performance could end the AI rebound: some Democrats have proposed making data-centre operators bear more of the electricity costs their projects create, which he said could affect the economics of new data centres and the wider AI investment boom.