Global equities retreated on Thursday, with MSCI's All-World index set for its largest daily fall in two weeks, down 0.4%, as tech shares tumbled from Seoul and Tokyo to Amsterdam and Paris.

Meta, the first of the so-called AI hyperscalers to publish quarterly results, reported third-quarter revenue late on Wednesday that beat expectations. Yet any optimism was short-lived: the company unveiled a plan to issue non-voting stock that revived concern over its mounting capital commitments.

Meta also suffered a legal blow overnight, after a judge in New Mexico ordered the company to pay a $25 billion penalty in a data privacy case. Meta shares fell around 3% in premarket trading, while US stock futures dropped between 1% and 1.7%.

The reversal is striking because Meta delivered precisely what bulls wanted — an earnings beat — and investors sold anyway.

According to Ben Laidler, head of macro and equity strategy at Bradesco BBI, 'there are lots of crosscurrents in markets at the moment, which are grappling for a narrative right now.'

He added that 'the big concern is that AI-driven earnings narrative, which has supported US earnings and spread to global equities, may be challenged here.'

The selloff spread far beyond one company: the STOXX 600 fell 0.7%, weighed down by tech-related names such as ASML, Schneider Electric and Siemens Energy, showing how tightly global equities are now tied to confidence in the AI spending story.

Tesla, which also reported earnings and cut its spending forecast ahead of a possible merger with SpaceX, dropped nearly 4% in the premarket.

Geopolitics added pressure: Brent crude rose nearly 3% to $112 a barrel, near a five-month high, after more Houthi attacks in Saudi Arabia raised the risk of wider Middle East conflict and supply disruptions.

Nervousness about damage to the global economy drove flows into government bonds, pushing US Treasury yields down by the most in a week, with the 10-year note 10 basis points lower at 5.05%.

French 10-year yields rose 11 bps to 5.107% — above 5% for the first time since 2002 — meaning US yields now trade below France's for the first time in 13 years.

The days ahead will test whether the AI earnings narrative can withstand hyperscaler spending scrutiny, with more quarterly results still to come from the biggest tech names.

The yen drew safe-haven demand, leaving the dollar down 0.7% on the day at 157.1, after Deputy Bank of Japan Governor Ryozo Himino signalled his readiness to raise borrowing costs — a signal that could keep pushing Japanese yields higher.

The euro fell 0.3% to $1.12, leaving the dollar index up 0.1%. Gold missed out on safe-haven flows, dropping 1.8% to $4,070 an ounce, while bitcoin and ether both lost 3.5% to trade at $81,837 and $2,405 respectively, underscoring that even crypto is not insulated from the risk-off turn.