Market wobbles and economic stability

Daily update

AI concerns weakened Asian equity markets, after a data centre’s market launch performed poorly. The fact that one company had such a broad reaction might indicate a degree of investor nervousness. Economists are less concerned—economic wealth effects from the AI story seem modest, and a slowing of real world AI investment might benefit other sectors of the economy.
China’s central bank has announced it will shift its interest rate target at some point (from a 7-day rate to an overnight rate). There is some speculation this move may mask a policy easing (official media reports deny this). China could ease with or without a technical change, and the cost of credit does not seem to be what is causing the lackluster domestic economic activity.
UK labor market data have been plagued by quality problems (most recently, inventing a productivity crisis that did not exist). The latest numbers suggest a rather dull labor market—modest reductions in employment, with low but positive inflation-adjusted average earnings growth.
The German October ZEW survey takes the views of financial market professionals. This group was far too pessimistic about the effects of the Gulf war, and sentiment has been normalizing with the realization that things have changed since the 1973 oil shock.