Market Volatility Amid US-China Talks and Tech Earnings
New York saw a period of uncertainty in the stock markets on Thursday, as traders evaluated the outcomes of a high-profile meeting between the leaders of the United States and China. The event, which took place in South Korea, marked the first such encounter between U.S. President Donald Trump and Chinese President Xi Jinping since 2019. Both leaders described the discussion as "amazing," with an agreement to ease tensions in the ongoing trade war that has impacted global financial markets.
The agreement included Washington reducing some tariffs, while Beijing pledged to maintain the supply of critical rare earths. However, the absence of a formal signed document means there remains a level of uncertainty regarding how the relationship between the two countries will evolve. Analyst Patrick O’Hare from Briefing.com noted that both nations have demonstrated a willingness to take strong actions when they believe it is necessary.
Prior to the meeting, anticipation had driven stocks to record highs. However, this momentum has since faded, leading to a retreat in Wall Street indices. The Nasdaq experienced the most significant drop among the major indices, falling by 1.6%. Sam Stovall from CFRA pointed out that the market was vulnerable to such a decline, given the high valuations of equities and the impact of the Federal Reserve's decision on Wednesday, along with disappointing tech earnings.
In Asia, markets ended mostly lower, while European indices such as Frankfurt and London remained flat after experiencing fluctuations during afternoon trading. Shares in Meta fell by approximately 11.3% following a report of an 83% drop in profits to $2.7 billion, largely due to a $16-billion accounting adjustment linked to a U.S. fiscal overhaul legislation supported by Trump. Microsoft shares dropped by 2.9%, while shares in Google’s parent company, Alphabet, increased by 2.5%.
Analysts suggest that the market reaction reflects investors' growing awareness that the AI boom may come with its own challenges. Russ Mould, investment director at AJ Bell, stated that the business models of large technology firms are becoming more capital-intensive as they expand their AI capabilities. If AI fails to generate revenue, he warned, the impact on share prices could be severe.
Despite these concerns, Fawad Razaqzada from Forex.com believes that unless there are significant negative surprises from remaining tech giants yet to report, equities may still have room to grow. Amazon and Apple are scheduled to release their results after U.S. markets close on Thursday.
In Seoul, the stock market received a boost from Samsung Electronics, which reported a 32% increase in quarterly profits, driven by rising demand for memory chips fueled by AI advancements.
The European Central Bank maintained interest rates at their current levels, as expected, with inflation hovering near its target and the eurozone economy showing resilience. Data released on Thursday revealed that the eurozone economy grew faster than anticipated in the third quarter of 2025.
Meanwhile, the Bank of Japan also kept interest rates unchanged on Thursday, causing the yen to strengthen. This followed the U.S. Federal Reserve’s second rate cut of the year. However, Fed Chair Jerome Powell’s announcement raised doubts about the possibility of an additional cut in December, which affected U.S. markets and contributed to a rise in the value of the dollar on Wednesday.