Global stocks slide as Tesla’s spending cut and Meta dent AI optimism, and Hong Kong suffers its worst day in seven months

Global stocks fell and bonds gained as Meta dented optimism about technology⁶. Markets sold off worldwide as further conflict loomed in the Middle East and Elon Musk cut spending at Tesla⁵. US stock futures retreated on concerns about AI¹², as the rally driven by tech earnings faded¹¹.

Tesla cut spending ahead of a potential deal with SpaceX, even as Musk bets the carmaker’s future on AI and robots². Musk set a lower sales target for Tesla³, and the company’s profit dropped⁴. Musk is exploring a combination of Tesla with SpaceX, a far more capital-intensive business².

One analyst asked how much the Tesla capex cut is weighing on the market¹. Many AI bulls had long said the first hyperscaler spending cut would mark the end of the AI trade, the analyst said¹.

Why it matters to investors

Asia took the brunt of the selling. Asian stocks sank to a three-month low on tech angst and Gulf tensions⁷. Chinese equities entered a bear market as technology shares sank and rising oil prices added to the pressure¹⁰.

The Hang Seng Index fell 3% to 22,934.68 at Thursday’s close, its worst single-day performance since 23 March and its steepest decline in seven months⁹. The Hang Seng Tech Index plunged 5% to a level not seen in two years⁹. Hopes had faded that Beijing would implement more meaningful stimulus, after data indicated the annual growth target was within reach⁹.

The yen drew safe-haven demand, leaving the dollar down 0.7% at 157.1⁶. The yen had firmed after Bank of Japan Deputy Governor Ryozo Himino signalled his readiness to raise borrowing costs^7,8.

Concern over AI now centres on whether supply chain constraints will limit the buildout and whether revenues will keep up with breakneck infrastructure spending¹². Analysts estimate that AI capex will hit $1.6 trillion in 2027⁵. BlackRock chief executive Larry Fink warned that delays in building data centres could push up computing costs¹¹.

What to watch

The next test is whether other large spenders follow Tesla in trimming capital budgets, which AI bulls have long treated as the signal that would end the trade¹. Tesla’s lower sales target and falling profit also bear on the terms of any combination with SpaceX^2,3,4.

In Asia, investors will watch whether Beijing responds to the bear market in Chinese equities with fresh stimulus^9,10. Gulf tensions and oil prices remain a second source of pressure on risk assets^7,10.