U.S. stocks rose on the back of optimism surrounding artificial intelligence (AI) investments, but persistent high interest rates, a strong dollar, and rising oil prices from the Middle East have continued to create instability in global financial markets. The vulnerabilities of emerging market financial systems have become particularly evident, especially following Brazil's recent elections, which saw a sharp decline in both stock prices and currency value.
According to the International Financial Center, the U.S. S&P 500 index closed at 7,676.8 on October 26, up 0.70% from the previous trading day. The European Stoxx 600 index also rose by 0.77% to finish at 640.66. In contrast, Japan's Nikkei 225 index fell by 0.80%, and South Korea's KOSPI index dropped by 1.46%, reflecting mixed trends among major global markets.
The rise in U.S. stocks was driven by renewed investor sentiment following AI company Anthropic's application for a Nasdaq listing. The volatility index (VIX), which measures market anxiety, decreased by 5.45% to 18.39. However, the yield on the U.S. 10-year Treasury note remained high at 4.99%, just below the 5% mark, indicating ongoing concerns about borrowing costs.
In the foreign exchange market, the dollar continued to strengthen. The dollar index rose by 0.19% to 102.01, while the euro and yen fell by 0.25% and 0.40%, respectively. In New York, the won-dollar exchange rate was 1,326.4 won, up 3.3 won from the closing price in Seoul. Despite a cautious stance ahead of the upcoming Federal Open Market Committee (FOMC) meeting, the high level of U.S. interest rates remains a burden for major currencies.
Amid these developments, Brazil's political and fiscal uncertainties have led to a sharp decline in its financial markets. Following President Lula's victory in the runoff election, the Bovespa index plummeted by 13.9%, and the value of the real dropped by 8.1% against the dollar. This reflects concerns over increased fiscal spending and rising national debt, which now stands at 82% of the country's GDP.
Concerns over oil prices from the Middle East persist. Brent crude fell by 0.78% amid discussions of easing tensions among key regional countries but remained high at $115.81 per barrel. With the possibility of U.S. military action against Iran being discussed, fears are growing that any escalation in military conflict could disrupt oil supply and increase inflationary pressures.
Looking ahead, analysts believe that evaluations of AI investment profitability and the geopolitical situation in the Middle East will significantly influence global capital flows. If high oil prices and elevated borrowing costs persist, along with weakening expectations for corporate earnings, the upward momentum of U.S. stocks may slow, and volatility in emerging market financial systems could increase.
* This article has been translated by AI.
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