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A look at the day ahead in European and global markets from Stella Qiu It was already a troubling set-up for stocks, with valuations stretched, the whiff of an AI bubble, a shut U.S. government and the ongoing break-up between Washington and Beijing. Now, add in jitters about U.S. regional banks. Overnight, Zions sank 13% after disclosing it would take a $50 million loss in the third quarter on two loans from its California division. Western Alliance's stock slumped 11% after it initiated a lawsuit alleging fraud by Cantor Group V, LLC. The banks' selloff comes more than two years after Silicon Valley Bank's 2023 failure, when high interest rates drove paper losses on its bonds, sparking a fatal deposit run that felled Signature Bank days later. Worries of a repeat drove shares in the red and had markets baying for more U.S. rate cuts. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.9% on Friday and Japan's Nikkei slid 1.1% as its banking index tumbled. Wall Street futures fell 0.4% ahead of more earnings from U.S. regional banks later in the day. European stock futures lost 0.8%, while FTSE futures dropped 1%. The flight to safety saw gold hit a record of $4,378.69 per ounce and was poised to finish the week 8.9% higher – the biggest weekly rise since September 2008 when the collapse of Lehman Brothers fuelled the global financial crisis. How is that not ominous? Treasuries also found their safe-haven mojo back, rallying for a third straight week. Two-year Treasury yields hit a fresh three-year trough of 3.3890% as investors bet the Federal Reserve will have to cut rates twice by year end, with some chance of an outsized 50 bps move. While financial stability risks seem contained for now, Jamie Dimon has said "When you see one cockroach, there are probably more, and so everyone should be forewarned." Investors assume the Fed will ride to the rescue, because of course it will. But cutting rates when inflation is at 3% and the full impact of tariffs on prices is only starting to be felt could be just a taster of what to expect when Trump gets to appoint his very own Fed chair. Key developments that could influence markets on Friday: – Little data released as US government is shut – Fed official Alberto G. Musalem speaks, as well as Bank of Japan's Deputy Governor Shinichi Uchida – US earnings include American Express, State Street and more regional banks (Editing by Muralikumar Anantharaman)

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By David Shepardson and Alexandra Alper WASHINGTON (Reuters) -The chair of the House Select Committee on China said Thursday that a licensing agreement for use of the TikTok algorithm, as part of a deal by China-based ByteDance to sell U.S. assets of the short video app, would raise "serious concerns." Representative John Moolenaar, a Republican, is waiting for a briefing to get more details on the deal that White House officials said previously would include the new owners of TikTok's U.S. assets licensing the algorithm. "I think anytime you have (China) with leverage over the algorithm, I think that's a problem," Moolenaar said at an event at the Hudson Institute. TikTok did not immediately comment. President Donald Trump signed an executive order on September 25 declaring that the plan to sell TikTok's U.S. operations to a consortium of U.S. and global investors meets the national security requirements set out in a 2024 law and gave them 120 days to complete the transaction. "I just believe you have to have a new algorithm, and I don't know that you can reprogram," Moolenaar added, pointing to technology experts who say it is unclear precisely what is in the algorithm. "I would say it's still very much a work in progress." Trump last month delayed until January 20 enforcement of the law banning the app used by 170 million Americans unless its Chinese owners sell it. Trump's order said the algorithm will be retrained and monitored by the U.S. company's security partners, and operation of the algorithm will be under the control of the new joint venture. The agreement on TikTok's U.S. operations includes the appointment by ByteDance of one of seven board members for the new entity, with Americans holding the other six seats. ByteDance would hold less than 20% in TikTok U.S. to comply with requirements set out in the 2024 law that ordered it shut down by January 2025 if ByteDance did not sell its U.S. assets. (Reporting by David Shepardson and Alexandra Alper; Editing by Franklin Paul and Edmund Klamann)

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(Reuters) -Banks including JPMorgan, Bank of America, Goldman Sachs and Citigroup are in talks with the U.S. Treasury to provide up to $20 billion in loans to Argentina, Semafor reported on Thursday, citing people familiar with the matter. U.S. Treasury Secretary Scott Bessent on Wednesday had said that the department was working with banks and investment funds to create a $20 billion facility to invest in the South American country's sovereign debt. Bessent said that the facility would sit alongside a new $20 billion U.S. currency swap line for Argentina, providing a total of $40 billion in support for Latin America's third-largest economy. Citi sold Argentine pesos to the U.S. Federal Reserve as part of the Treasury's program, a person familiar with the matter told Reuters. Bloomberg was the first to report on Citi's involvement. BofA, Goldman Sachs, JPMorgan and Citi declined to comment when contacted by Reuters about the Semafor report. Argentina also had no comment. Citi did not respond to a request for comment on selling pesos to the Fed. President Donald Trump said on Tuesday that the U.S. would not "waste our time" with Argentina if President Javier Milei's party loses in parliamentary elections on October 26. But Bessent clarified that the U.S. would continue to support Argentina financially as long as Milei's government pursues "good policies," regardless of the election outcome. (Reporting by Juby Babu in Mexico City and Tatiana Bautzer in New York; Editing by Alan Barona)

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By Joice Alves LONDON (Reuters) -The boom in investment in artificial intelligence is starting to be felt for the first time in currency markets across Europe, and analysts reckon the Swedish crown and sterling stand to benefit the most. Trading in the almost $10 trillion-a-day FX markets this year has been driven by broad dollar weakness given tariff-related concerns and U.S. rate cut expectations. But dig deeper and the impact of AI, which has helped drive stocks to record highs, is rippling across to currencies. According to JPMorgan, the resilience of the Swedish crown, or krona, and sterling in recent months may be partially attributable to tech as Sweden and Britain stand out on measures of AI investment and their currencies are receiving a tailwind from this dynamic, even if only a small one. By one measure, the UK and Sweden received just over $4 billion each last year in private AI investments, ranking third and fourth in a Stanford University AI index of biggest beneficiaries of such investments, behind the United States and China.  Sweden's krona is the strongest-performing major European currency against a weak dollar so far this year, having climbed almost 15%. Sterling has rallied 7%.     Dissecting the exact impact of AI on currency moves is hard, analysts say, given other factors at play such as interest rate expectations or fiscal unease, especially with sterling. "Large AI investments have been announced for both countries," said Rabobank's head of FX strategy Jane Foley. "The inward investment could certainly have created some demand for sterling and Swedish crown respectively and created some resilience".  The crown is also up against the euro and other Scandinavian currencies. Sterling, hurt by fiscal worries, is down against the euro and Swiss franc, however. Investments in Swedish AI companies, which bring higher demand for crowns, would cause a visible spike in the currency, while the impact of such investments on sterling would be less visible because it is already so heavily traded, Rabobank's Foley said.   Sterling is the world's fourth most-traded currency, accounting for just over 10% of all trades, while Sweden's crown accounts for less than 2%, according to the Bank for International Settlements. BIG PROMISES Britain and the United States last month agreed a technology pact, with top U.S. firms led by Microsoft pledging 31 billion pounds ($42 billion) in UK investments. AI giant Nvidia plans to provide its data centre platform to Swedish companies including telecoms gear maker Ericsson, and drug developer AstraZeneca. Microsoft, Facebook's owner Meta, Google's owner Alphabet and Canada's Brookfield Asset Management plan data centres in Sweden given the country's reliable electricity supplies and infrastructure. While it's too soon to say what impact AI will have on economic growth or unemployment, which could potentially add to strains on public finances, the announcements offered a favourable backdrop for the krona and sterling, analysts said. A report by SEB released earlier this year looking at major Swedish participants in the FX market showed their net overweight position in the crown was close to record highs. Societe Generale head of corporate research for FX and rates Kenneth Broux said U.S. tech investment pledges can diminish pessimism ahead of Britain's November budget, when taxes are expected to rise, lifting sterling's appeal. Latest CFTC positioning shows investors are neither heavily in favour nor against sterling. Speculators have eroded bullish dollar positions against the pound from August's almost three-year high of $3.3 billion to just $165 million, reflecting waning conviction that the greenback will rally against sterling. "What AI does potentially change is the outlook for productivity growth, the Achilles' heel of the UK economy", said Broux.  An aging population in the West opens the door to “reskilling and upskilling” which can help keep a lid on welfare payments and potential unemployment benefits caused by AI, he added.  Some are broadly positive on sterling. Investment firm St James's Place has an overweight position. Deutsche Bank expects sterling to rise to $1.45 over the next couple of years, compared with roughly $1.34 currently.  And HSBC Private Bank's global CIO Willem Sels said that while his near-term view on sterling was not too positive given the looming budget, he sensed that investor sentiment towards the UK was more "constructive" than it appears. "One of the reasons for that is that people see the UK as a relatively interesting destination for AI-related investment," Sels said.   "This is why we also saw (Nvidia CEO) Jensen Huang sitting next to the Prime Minister (Keir Starmer earlier this year) and talking about the strength of the UK." (Reporting by Joice Alves; Editing by Dhara Ranasinghe and Hugh Lawson)

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By Stephen Nellis and Harshita Mary Varghese (Reuters) -Oracle said on Thursday it expects cloud infrastructure revenue to grow to $166 billion in fiscal 2030, which would make up nearly 75% of its total sales by then. Chief Executive Officer Clay Magouyrk gave the cloud infrastructure prediction during a meeting with financial analysts, where he said new bookings were coming in from a range of customers, not just OpenAI. Dough Kehring, Oracle's chief financial officer, said the company expects $225 billion in overall revenue and adjusted profits of $21 per share by the firm's fiscal 2030. Analysts had been expecting $198.4 billion in overall sales and adjusted profits of $18.92 per share for fiscal 2030, according to LSEG data. Oracle shares closed up 3% after the cloud computing announcement, but declined about 2% in after-hours trading after the broader revenue and profit forecasts. Oracle said last month that it has racked up hundreds of billions of dollars worth of infrastructure bookings and is working with ChatGPT creator OpenAI on a $500 billion project that will include five new data centers. For the most recent quarter, Oracle reported cloud revenue jumped 28% to $7.2 billion. Magouyrk said that during a single 30-day period during the previous quarter, Oracle Cloud Infrastructure, the company's cloud unit, had booked $65 billion in new commitments, which included a $20 billion deal with Meta Platforms. He said that the newest $65 billion of bookings came from customers other than OpenAI. "I know some people are questioning, 'Hey, is it just OpenAI?' The reality is, we think OpenAI is a great customer, but we have many customers," Magouyrk said. "This is literally seven deals, four customers, all of them other than OpenAI." Oracle also sought to address concerns among investors about its gross margins, which were 68.7% in its most recent quarter and which analysts predict will fall slightly in its fiscal 2027, according to LSEG estimates. Oracle said it expected to have adjusted gross margins of between 30% and 40% for delivering AI cloud computing infrastructure, while other segments such as more conventional cloud software and infrastructure for business customers would have margins of between 65% and 80%. Oracle also said that those margins would be steady over the term of a contract, showing a hypothetical example of an AI infrastructure rollout where the company would have about $6.4 billion of costs in each year of a six-year, $60 billion cloud contract. (Reporting by Harshita Mary Varghese in Bengaluru and Stephen Nellis in San Francisco; Editing by Vijay Kishore, Mark Porter and Sonali Paul)

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(Reuters) -A new underground transmission line was approved by the New York State Public Service Commission linking an existing Clay substation with Micron Technology's proposed semiconductor megafab facility in Onondaga County, Governor Kathy Hochul announced on Thursday. The two-mile, 345-kilovolt line is a key piece of infrastructure for Micron’s planned $100 billion investment in Central New York, the largest private investment in the state’s history, Hochul's press release said. The project is expected to create more than 50,000 jobs over the next two decades, including 9,000 direct positions at Micron. "This project is set to transform Central New York — and we're moving quickly ahead with all due speed and deliberation," Hochul said. The transmission line approval follows a 2022 agreement between Micron and New York State, when the chipmaker selected the region for its advanced manufacturing facility. The megafab aims to produce one in four of all U.S.-made semiconductors by 2030. The commission also approved environmental and construction plans for the first phase of the project, including the eastern expansion of the Clay substation and installation of equipment linking it to the Micron facility. (Reporting by Sarah Qureshi in Bengaluru; Editing by Lisa Shumaker)

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