Stocks Hit Record on AI Rally, Oil Rises on Iran: Markets Wrap
(Bloomberg) — Stocks rose to a record as investors doubled down on the artificial intelligence trade that’s powered equities to all-time highs. Oil climbed as a US-Iran ceasefire deal remained elusive.
The MSCI All Country World Index, the broadest measure of global equities, advanced 0.2%, with Asian shares climbing 1.1% to an all-time high. Gauges in South Korea and Taiwan — bellwethers for AI investments — and the Nikkei in Japan all hit records.
Sentiment was further buoyed by Nvidia Corp. entering the windows laptop market, taking on Intel Corp. and Advanced Micro Devices Inc. Futures for the Nasdaq 100 Index extended gains to 0.6% on the move. Elsewhere, SoftBank Group Corp., whose investments include chip designer Arm Holdings Plc and ChatGPT maker OpenAI, surged as much as 14%, putting it on track to become Japan’s most valuable company.
Weighing on the mood, however, was a rally in oil prices. Brent climbed over $93 a barrel as Middle East tensions remained elevated and efforts to reopen the Strait of Hormuz showed little progress. That sent Treasuries lower across the curve, while European shares were set for modest losses at the start.
The dollar, the haven of choice since the US-Israel war on Iran started, strengthened for the first time in three sessions.
Relentless enthusiasm for the AI trade continued to propel global equities toward record highs, helping lift South Korea’s market to the top of global performance rankings this year. Still, oil’s rebound on Monday after its steepest monthly drop in more than six years is reviving concerns about energy-driven inflation and could complicate the recent recovery in global bond markets.
“The AI trade remains then firmly in focus, although it hardly needs additional attention given the extraordinary price action,” wrote Chris Weston, head of research at Pepperstone Group.
What Bloomberg Strategists Say…
“The Kospi index is extending its gains to more than 4%, while other tech-heavy regional benchmarks including the Nikkei, the Taiex and Hang Seng Tech index are also advancing. The AI trade continues to prove generally un-tethered from geopolitical concerns, as crude futures remain solidly higher.”
— David Savage, MLIV. For full analysis, click here.
Offsetting war worries has been unbounded enthusiasm for sectors touched by the AI trade.
The Philadelphia Stock Exchange Semiconductor Index, or SOX, is on pace for its best quarter ever after soaring 69% in the past two months. Chips are the best-performing sector in the S&P 500 this year by a wide margin. Micron Technology Inc.’s shares have more than tripled this year. In Asia, SK Hynix Inc. has soared 260%, and Samsung Electronics Co. is up over 180%.
If anything threatens the upward arc, it’s the velocity of the advance itself, according to Laurent Lamagnere, deputy CEO at Alphavalue in Paris.
“There’s a gradual realization across the market that something’s got to give in the AI economy: there’s no way that these massive investments will pay out for every actor,” Lamagnere added. “A correction at one stage would make sense.”
In other corners of the market, the yield on the benchmark 10-year Treasury climbed three basis points to 4.47%. Yields on government bonds of similar maturity in Australia and Japan also climbed. Futures of similar-tenor debt in France and Germany declined.
Gold slid 0.4% to trade around $4,520 an ounce.
During the weekend, an Iranian ballistic missile strike on a Kuwaiti air base caused minor injuries to several Americans, while Israel stepped up its offensive against the Tehran-backed Hezbollah in Lebanon.
The US also conducted “self-defense strikes” on Iranian radar and command and control sites for drones in Goruk, Iran and Qeshm Island this weekend.
Meanwhile, the US and Iran exchanged messages seeking amendments to a draft agreement that would extend the ceasefire and reopen the Strait of Hormuz, though it remained unclear whether talks were making much progress.
US President Donald Trump urged calm on the Iran deal, saying it will all work out well.
“There are likely going to be more setbacks, but the market has already priced an agreement in Iran,” Patrik Lang, chief investment strategist at Geneva-based Global Gate Asset Management. “I wouldn’t expect big market moves, except maybe lower oil, once the deal is announced.”
Corporate News:
EasyJet Plc, the UK airline that helped pioneer ultra low-cost travel in Europe over the past three decades, has drawn takeover interest from an investment firm. Berkshire Hathaway Inc. will acquire Taylor Morrison Home Corp. in an all-cash deal worth about $6.8 billion, the first major purchase under chief executive Greg Abel and a vote of confidence in the US housing market. LG Electronics Inc. shares rose by its daily limit of 30% for a second-straight session Monday on reports that LG Group Chair Koo Kwang-mo will meet with Nvidia’s Jensen Huang on June 5. SK Hynix evacuated about 3,600 employees from its semiconductor complex located in Cheongju, South Korea after a fire and toxic gas leak at the site, Yonhap News reports, citing a company official. Finnish-listed Hiab Oyj has agreed to acquire refuse collection vehicle manufacturer Labrie Environmental Group at an enterprise value of $1.04 billion. HSBC Holdings Plc is redoubling efforts to revive its flagging Hong Kong investment banking franchise. Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.3% as of 6:52 a.m. London time Nasdaq 100 futures rose 0.6% The MSCI Asia Pacific Index rose 1.1% The MSCI Emerging Markets Index rose 1.7% Japan’s Topix fell 0.4% Australia’s S&P/ASX 200 was little changed Hong Kong’s Hang Seng rose 0.8% The Shanghai Composite was little changed Euro Stoxx 50 futures fell 0.1% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1653 The Japanese yen fell 0.1% to 159.47 per dollar The offshore yuan was little changed at 6.7644 per dollar The British pound was little changed at $1.3465 Cryptocurrencies
Bitcoin fell 0.4% to $73,344.98 Ether fell 0.5% to $1,995 Bonds
The yield on 10-year Treasuries advanced three basis points to 4.46% Germany’s 10-year yield declined two basis points to 2.94% Britain’s 10-year yield was little changed at 4.81% Japan’s 10-year yield advanced 3.5 basis points to 2.685% Australia’s 10-year yield advanced six basis points to 4.89% Commodities
Spot gold fell 0.4% to $4,522.36 an ounce West Texas Intermediate crude rose 2.8% to $89.83 a barrel Spot gold fell 0.4% to $4,522.22 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Matthew Burgess.
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