AI Revenue Doubts Ease, but the Reprieve Looks Fragile
TREE NEWS reports: Global markets steadied on Friday after fresh revenue projections from OpenAI reassured investors who had spent the prior session dumping AI-linked shares. OpenAI has told investors it expects annualized revenue to reach or exceed $70 billion within the year, a figure that directly answers skepticism that had circulated after reports suggested annualized revenue was closer to $50 billion. The clarification reversed the tone in technology names and gave broader risk assets room to breathe.
Asia-Pacific equities rose about 0.3% on the session, with Japan’s Nikkei 225 finishing roughly flat and Korean markets closed for a holiday. European index futures pointed to a higher open. In the United States, S&P 500 futures gained 0.3% and Nasdaq 100 futures added 0.5%, clawing back part of Thursday’s semiconductor-led selloff that saw the Philadelphia Semiconductor Index drop 3.4%.
Bonds, Gold and the Rate Signal
The more consequential move came in fixed income. Long-dated US Treasury yields eased from multi-decade highs, with the 10-year note hovering near 5.22%. Japanese 10-year government bond yields fell 5.5 basis points to 3.025%, extending a Treasury rally from the previous session. That decline in long-end yields did two things at once: it revived demand for non-yielding assets and it softened concerns that high borrowing costs are making massive data-center and compute investments uneconomic.
Gold was the clearest beneficiary, rising more than 1.6% intraday to trade around $4,200 an ounce, while silver climbed 2.0% to $60.36 an ounce. The dollar softened modestly, with a broad dollar spot index down 0.1%, as easing Middle East tensions lifted Asian currencies.
Oil Slips, Iron Ore Extends Its Losing Streak
Crude retreated after comments indicating the United States will not strike Iran before November’s midterm elections. Brent fell 1.2% to $102.95 a barrel, and West Texas Intermediate dropped 1.3% to $90.27.
Iron ore remained the weakest link in the commodity complex. Singapore futures touched $90.90 a ton intraday, the lowest since September 2024, and Dalian contracts hovered near two-year lows. Prices have closed higher on only one trading day in the past three weeks. Analysts describe a pricing regime shift away from a “high hot-metal output plus freight support” dynamic toward one dominated by rising supply, weakening demand and inventory accumulation. Guinea’s accelerating exports, enabled by expanded transshipment capacity, are adding to a global surplus.
Demand has not yet visibly deteriorated — daily pig iron output is holding near 2.34 million tons — but fewer than 7% of steel mills are profitable. Persistently thin margins could eventually force deeper output cuts that would erode iron ore consumption. Coking coal futures in Dalian jumped 4.2% to 1,538.5 yuan a ton, squeezing mill economics further, though analysts note that any resulting production cuts could lend short-term support to steel prices.
Why This Matters for Investors
- The AI trade now runs on disclosure, not narrative. A single revenue datapoint moved semiconductors and index futures. The coming earnings season is the real test, particularly for companies with the heaviest capital expenditure commitments.
- Long-end yields are the swing factor. The combination of elevated capex and high financing costs is what makes AI infrastructure spending vulnerable to scrutiny. Any sustained fall in long yields is bullish for gold, silver and rate-sensitive equities.
- Commodity divergence is widening. Precious metals are rallying on falling real rates and safe-haven demand, while industrial inputs like iron ore are being repriced lower on supply growth and margin stress in Chinese steel.
- Sentiment is thinning. Repeated waves of AI-related negative headlines are arriving more frequently and having a cumulative effect on risk appetite, even when each individual scare fades within days.
