Stocks recover from AI-led bruising; central banks in focus

By Stella Qiu and Amanda Cooper

SYDNEY/LONDON, Dec 18 (Reuters) - Global shares crept higher on Thursday, after the tech sector got hit by renewed concern over AI spending, and investors prepared for a series of central bank meetings that will probably reflect the divergence in worldwide monetary policy.

Geopolitical tensions are roiling commodities markets. Oil prices extended a rebound from five-year lows after President Donald Trump ordered a "blockade" of all sanctioned oil tankers entering and leaving Venezuela. Silver hit a new record that helped pull up gold.

Sterling fell for a second day, after an unexpected drop in UK inflation on Wednesday all but guaranteed a rate cut from the Bank of England later on Thursday.?

The European Central Bank also delivers its policy decision on Thursday and is widely expected to leave rates unchanged, while traders expect Japan to raise rates on Friday but are less certain about the pace of tightening next year.?

Shares in Europe rose broadly, lifting the STOXX 600 by 0.1%, while U.S. stock futures rose 0.3-0.6%, suggesting there may be some respite for the benchmark indexes after Wednesday's wash-out.

Concern over record AI spending resurfaced after?Oracle announced an equity deal to support a data centre project would not include a key partner, Blue Owl Capital. Its shares tumbled 5.4%, meaning they have now lost 50% of their value since mid-September, when a deal with OpenAI sparked a 35% one-day rise.?

"Oracle remained the primary source of anxiety ... This latest setback deepened investor scepticism around Oracle's aggressive AI infrastructure build-out," said Tony Sycamore, analyst at IG, adding that he has now moved to a more neutral stance on the Nasdaq 100.

"Worries over soaring capex, heavy debt, construction delays, OpenAI's massive cash burn, and mixed Q2 earnings have eroded confidence, positioning Oracle as the poster child of fading AI infrastructure hype."?

INFLATION SURPRISE FIRMS CASE FOR BOE RATE CUT

On the monetary policy front, Federal Reserve Governor Christopher Waller, who is expected to be interviewed by Trump as a candidate for the next chair, said the central bank had room to cut interest rates, given the signs of job market weakness.

Trump said late on Wednesday the next Fed chairman would be someone who believed in lower interest rates "by a lot." The Fed has signalled only one rate cut next year.

Investors are also waiting for a U.S. inflation report for November later on Thursday that is expected to show core inflation at 3%.??

With the Fed focused on the jobs market, the inflation report may have less impact on rate expectations than it otherwise might.

"CPI, frankly, doesn't matter too much, with the Fed's reaction function tilting entirely towards supporting a stalling labour market at this stage, while jobless claims probably won't especially move the needle either, even if the initial print does coincide with the December nonfarm payrolls survey week," said Pepperstone strategist Michael Brown.

In the currency markets, sterling fell for a second day, dropping 0.16% to $1.3353, having hit a low of $1.3313 overnight after data showed British inflation slowed more than forecast to 3.2% in November, the lowest since March. That all but cemented the case for a rate cut from the BoE.?

The euro eased 0.14% to $1.1724, not far from a three-month top of $1.18, ahead of the ECB decision.?

Treasuries gained modestly in price, which sent two-year yields down 2 basis points to 3.464%, while benchmark 10-year yields dropped 1.8 bps to 4.133%.?

Oil prices gained for a second day as Trump's blockade of Venezuelan energy exports remained in place. Reports that the U.S. was preparing new sanctions on Russian oil if Moscow did not agree to a Ukraine peace deal also fuelled concern over near-term supply. [O/R]

U.S. crude rose 0.6% to $56.13 a barrel, while Brent crude rose 0.5% to $60 a barrel.

(Additional reporting by Stella Qui in Sydney; Editing by Shri Navaratnam, Stephen Coates and Kate Mayberry)