Oil hits $111, French yields spike, AI IPO flops 30%: global selloff

The numbers that broke the market's calm: Brent crude hit $111 a barrel, France's 10-year bond yield jumped to 4.94% - a level not seen since 2002 - and South Korean AI cloud provider Elice lost 30% on its debut after raising just $150 million. That triple whammy set off a global selloff that left S&P 500 futures flat to marginally lower before the New York open, after Asian and European markets had already taken a beating.

The triggers were geopolitical as much as financial. Saudi Arabia cancelled its flagship Future Investment Initiative, known as "Davos in the Desert," after Houthi attacks on Riyadh's airport. Alphabet president Ruth Porat, Goldman Sachs CEO David Solomon, and BlackRock CEO Laurence Fink had been billed as attendees. The Houthis also struck two tankers in the Strait of Hormuz on Friday. Meanwhile, France imposed curfews on major cities after nights of rioting and looting in Paris, with video showing shopkeepers begging young men to stop stealing inventory. Similar unrest spread to Milan.

The market reaction was broad. South Korea's KOSPI fell 3.73%, Japan's Nikkei 225 dropped 1.30%, China's CSI 300 lost 0.54%, and India's Nifty 50 was closed for a holiday. In Europe, the Stoxx 600 fell 0.34% and the FTSE 100 fell 0.54%. The S&P 500 itself had risen 0.41% the day before, but futures pointed to a flat-to-lower open. Bitcoin traded at $82,769. Commerzbank's Christoph Rieger captured the mood: "Latest dynamics show signs of global, not just French debt crisis."

The selloff also lands on an earnings season that is off to a weak start. By yesterday, 46 companies in the S&P 500 had reported Q3 results, representing 11% of the index's market cap. Bank of America's Savita Subramanian and Victoria Roloff noted that 80% beat expectations, down from 88% in Q2. Wells Fargo's Ohsung Kwon and team said EPS came in 0.3% below analysts' expectations, making it "one of the weakest starts to EPS season in history." That softness is now colliding with a geopolitical shock, and the combination is exactly what makes markets fragile.

The AI trade, which has powered much of the market's recent gains, is showing cracks. Glenmede's Jason Pride and Michael Reynolds point out that AI capex spending has juiced net earnings of S&P 500 companies, but there's a catch: capex is recognized immediately as revenue by the companies that receive it, while the companies that spend it depreciate the cost over years. That delayed bill will start showing up as increased expenses next year. Glenmede estimates this phenomenon is boosting S&P 500 profits by 9% in 2026, but it may become an earnings headwind as depreciation costs build into 2028.

The capex boom is also expected to run down. Stifel forecasts that the major hyperscalers will go cash flow negative in aggregate this year, as they increasingly fund capex with debt, and capex budgets as a whole are forecast to shrink next year. Deutsche Bank's Jim Reid has been tracking the divide: looking at over 100 tech stocks since October 2025, "the basket is up around +18% since, but that headline hides a market that has spent the year sorting AI exposure into those who pay and those who get paid." The spenders have gone nowhere: Microsoft is down 2%, Meta down 6%, Broadcom down 15%. The sellers have thrived: SK hynix and Samsung are up over 100%, TSMC up 60%.

For executives, the message is that risk is repricing fast. The French bond yield at 4.94% is a sovereign debt warning, not just a European story. The Elice IPO flop shows that AI hype has a ceiling. And the combination of Middle East supply shocks and European unrest is exactly the kind of environment where liquidity dries up quickly. Boards should stress-test their capital plans against a scenario where oil stays above $100, French-style debt concerns spread, and AI capex depreciation starts hitting income statements sooner than expected.