Stocks Climb as AI-Led Rebound Enters Day Two: Markets Wrap
(Bloomberg) — A recovery in the artificial-intelligence trade entered a second day in a cautiously risk-on session, with oil prices also falling as hostilities in the Middle East eased.
Nasdaq 100 futures advanced 0.7%, while chipmakers such as Marvell Technology Inc. and Micron Technology Inc. posted strong gains in US premarket trading. S&P 500 contracts rose 0.4%. Dip buyers fueled an 8.2% rebound in South Korea’s Kospi index, a top performer in Asia. Europe’s Stoxx 600 was up 0.5%.
Sentiment got a further boost from falling energy costs as Brent slid 2.1% toward $92 a barrel. While Israel and Iran agreed to end attacks against each other, President Donald Trump renewed claims that a US peace deal with Tehran was nearly done. Treasuries rose modestly as traders dialed back bets on US interest-rate hikes, with the 10-year yield down one basis point to 4.55%.
After a brief pause in the rally that propelled stocks to record highs, traders are returning cautiously on expectations that corporate profits will give equities further room to run. OpenAI’s confidential filing for an initial public offering is a reminder of the sector’s vast growth potential and appetite for investment, as is a record sale of Canadian dollar bonds by Amazon.com Inc.
“Tech has been driven by earnings over past weeks, but has also fully re-rated in hardware and semis,” said Wolf von Rotberg, equity strategist at Bank J Safra Sarasin. “With valuations back close to record highs, the pace of gains is likely to slow.”
In currency markets, the dollar headed for a back-to-back loss. Indonesia’s central bank raised its benchmark rate ahead of its next scheduled meeting to reverse a market selloff and support the rupiah.
Warnings that a push higher in stocks could prove choppy still abound. Citigroup Inc. strategists said traders are aggressively building short-selling positions in US equities, while bullish wagers on the tech sector remain stretched.
Friday’s near 5% selloff in the Nasdaq 100 has only partially reset exposure among investors, the Citi team led by David Chew noted. The next few weeks hold major risk events, with inflation data due Wednesday and the first Federal Reserve interest-rate decision under Chairman Kevin Warsh on June 17.
“The risk of a sudden rise in oil prices over coming months clearly remains,” Von Rotberg said. “If inflationary risks continue to rise, a more aggressive repricing of the Fed could easily challenge current valuations and derail equity markets.”
What Bloomberg Strategists Say:
“With limited event risk today, the positive mood could last through the session. However, markets are not in the clear. A busy calendar over the next couple of weeks, kicking off with inflation data tomorrow, is likely to revive volatility.”
— Skylar Montgomery Koning, macro strategist. For the full analysis, click here.
Corporate News:
GSK Plc agreed to buy clinical-stage biopharmaceutical company Nuvalent Inc. in a deal valued at $10.6 billion to expand in oncology treatments. Saudi Arabia’s Mutlaq Al-Ghowairi Contracting Co. has postponed plans for an initial public offering that was set to raise as much as $799 million and rank as the region’s first major listing of the year. OpenAI, the maker of ChatGPT, filed confidentially for an IPO, joining artificial intelligence rivals in tapping public markets to fund ambitious growth plans. SpaceX’s initial public offering is well oversubscribed, according to people familiar with the matter, as demand builds for a potentially record-setting debut. Elon Musk’s xAI has brought over an executive from SpaceX’s Starlink satellite-internet service to run the team that trains its Grok chatbot, replacing college-aged engineer Diego Pasini, according to an internal note seen by Bloomberg News. Apple Inc. used its Worldwide Developers Conference to lay the foundation for a new generation of products, making the case that it can overcome years of snags to compete in the AI era. The Pentagon accused some of China’s biggest companies, including Alibaba Group Holding Ltd., Baidu Inc. and BYD Co. of supporting the Chinese military. Some of the main moves in markets:
Stocks
The Stoxx Europe 600 rose 0.5% as of 10:13 a.m. London time S&P 500 futures rose 0.4% Nasdaq 100 futures rose 0.7% Futures on the Dow Jones Industrial Average rose 0.2% The MSCI Asia Pacific Index rose 2.6% The MSCI Emerging Markets Index rose 3.3% Currencies
The Bloomberg Dollar Spot Index fell 0.2% The euro rose 0.2% to $1.1556 The Japanese yen was unchanged at 160.16 per dollar The offshore yuan rose 0.2% to 6.7705 per dollar The British pound rose 0.4% to $1.3387 Cryptocurrencies
Bitcoin fell 1.1% to $62,758.34 Ether fell 0.9% to $1,674.99 Bonds
The yield on 10-year Treasuries declined two basis points to 4.55% Germany’s 10-year yield declined one basis point to 3.05% Britain’s 10-year yield declined three basis points to 4.92% Commodities
Brent crude fell 2.2% to $92.19 a barrel Spot gold was little changed This story was produced with the assistance of Bloomberg Automation.
–With assistance from Neil Campling and Michael Msika.
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