Broadcom (AVGO) margin warning slams AI stocks
Key Points
- Broadcom (AVGO)'s margin warning on AI-system and accelerator mix triggered heavy selling in Broadcom and weighed on AI and chip stocks, amplifying downside in US tech indexes.
- BOJ's pledge to continue raising policy rates had been priced in by markets, which supported the yen and put downward pressure on JGB prices.
- The ECB launched a reverse stress test of large euro-area banks to probe geopolitical shocks, raising the prospect supervisors could seek higher capital buffers and pressuring funding and term premia.
Global Market Summary
US equities closed lower after Broadcom (AVGO)'s margin warning weighed on chip and AI-exposed names; the S&P 500 (SPX) fell 1.07%, the Nasdaq (^IXIC) slid 1.69%, and the Dow (DJIA) declined 0.51%. European benchmarks eased on ECB supervisory moves and risk reassessment, with the French benchmark (FRA40) down 0.21%, the DAX (DAX) down 0.45% and the FTSE (UKX) down 0.56%. In Asia the Nikkei (NKY) rose 1.37% and the Shanghai Composite (000001.SS) gained 0.41% following BOJ guidance signaling further rate normalisation.
Top Movers
XLP led sector gains (+0.79%) with discretionary XLY (+0.43%) and healthcare XLV (+0.31%) also higher. Technology ETF VGT underperformed (-2.89%), with energy XLE (-0.98%) and industrials XLI (-0.63%) among laggards. Notable stock moves included YOU (+13.29%), RIVN (+12.11%) and LULU (+9.60%) on the upside, while FRMI (-33.84%) and SNDK (-14.66%) were among the largest decliners.
Macro highlights
Sources said the Bank of Japan will likely pledge to continue raising policy rates and may lift the policy rate toward 0.75%; that guidance has been priced in by markets, supporting the yen and pressuring JGB prices. The ECB launched a reverse stress test of 110 large euro-area banks to probe geopolitical shocks, a diagnostic step that raises the prospect supervisors could request higher capital buffers for specific banks and could affect funding and term premia. The Bank of England’s inflation attitudes survey showed one-year expectations slipped to 3.5% and UK GDP MoM printed -0.1% for October, a combination that marginally eases near-term upside risks to inflation persistence.
News that moved markets
Broadcom (AVGO) warned that a higher mix of AI system and custom-accelerator sales would compress near-term gross margins despite record AI revenue and an approximately $73 billion AI backlog; the margin guidance triggered sharp selling in Broadcom (AVGO) and pressured AI and chip-related names including NVDA, amplifying downside in the Nasdaq (^IXIC). Separately, social-media commentary including a Michael Burry post about potential U.S. bond-market nationalization circulated and highlighted fixed-income risk narratives during the session. Gold Royalty completed the acquisition of the Pedra Branca royalty, and HOERBIGER completed the divestiture of its subsidiary Altronic. Announced transactions included KVP International’s acquisition of SafePath Laboratories and IVD Research, shareholder approval for a Vital Energy merger with Crescent Energy, and several smaller announced acquisitions.
Key Takeaways
- US equities closed lower after Broadcom (AVGO)'s margin warning weighed on chip and AI-exposed names, with tech-heavy indexes underperforming.
- European benchmarks eased as the ECB's reverse stress test and risk reassessment prompted caution among investors and pressured regional markets.
- In Asia, the Nikkei and Shanghai Composite rose after BOJ guidance signaling further rate normalisation, which supported the yen and boosted regional equities.
- Consumer staples and discretionary ETFs led sector gains while technology ETFs lagged; several stocks posted large rallies and a few names suffered steep declines during the session.
References
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