U.S. stock futures have retreated from their overnight optimism as a sharply negative session in Asia and Europe underscores persistent jitters around technology stocks. The reversal follows a Monday relief rally for AI shares, with international selling pushing indices into the red and casting a shadow over the sector's momentum.
The decline in Asia was led by South Korea's Kospi, which closed in bear market territory. Across Europe, technology stocks dragged broader indices lower during the morning session. In premarket trade, shares of neocloud firms are falling, with CoreWeave giving up its recent gains despite an upgrade from Goldman Sachs. The investment bank described the stock as being "toward the top of the quality rankings in the ecosystem." HSBC disagrees with that assessment, noting late Monday that the shares could drop another 36% due to rising borrowing costs and slowing revenue growth for AI models.
A small IPO has amplified these concerns. Elice, a South Korean AI data center firm, debuted on the country's secondary market but saw its shares nosedive by over 30% in its trading debut. The stock's performance, alongside elevated yields on Oracle debt, exposes persistent credit concerns within the AI trade. CoreWeave remains central to this debate, with its negative close highlighting the fragility of investor confidence in the sector.
Energy markets are also under pressure. Brent crude, the international oil benchmark, rose to its highest level since May early Tuesday as attacks by Iran and its proxies picked up in the Middle East. Conflicts between Ukraine and Russia over energy infrastructure are further complicating the situation. Ukrainian President Volodymyr Zelenskyy is set to meet with U.S. envoys Steve Witkoff and Jared Kushner in Norway today, following President Donald Trump's call for a new leader of Ukraine.
Investors will turn their attention to two major tech companies reporting earnings after the market close: Netflix and SpaceX. Netflix is expected to post 40% earnings growth for the third quarter, according to LSEG. However, with significant C-suite changes and a major raft of job cuts, investors will be closely watching the outlook for user engagement. SpaceX is facing a tough act to follow after Elon Musk pledged to give every American child a SpaceX share next year. This will be only the second time the group has reported earnings as a listed company. While shares are trading above the $135 IPO price, they remain below their post-debut peaks.
In a separate development, Nvidia is committing nearly $10 billion to companies, universities, and research institutions across Europe. Jensen Huang announced a fresh collaboration with Germany after toasting with Chancellor Friedrich Merz following the unveiling of a strategic cooperation agreement in Berlin.
Meanwhile, anger over the cost of living and pressure on public services has driven hundreds of thousands of protesters onto the streets across several European countries. France saw the largest demonstrations at the weekend, with more than 500,000 people marching. While most protesters acted peacefully, reports indicate that some engaged in looting, shop vandalism, arson at city halls, and assaults on police officers. Demonstrations also occurred in Italy, Spain, Portugal, and Albania over the same weekend.