The Nasdaq composite index reached a record high on Tuesday, driven by sustained demand for artificial intelligence (AI) technologies and strong corporate earnings. The index rose 0.40% to 14,271.59 points, while the S&P 500 remained relatively unchanged and the Dow Jones Industrial Average fell 0.40%. Global stock markets also saw gains, with the MSCI global stock index rising 0.08% and the European Stoxx 600 index increasing 0.2%.
The technology sector continued to attract investor interest, with no signs of waning demand for AI. According to Ulrike Hofmann-Borschard, head of equity investment for the Americas and global head of equity at UBS, the positive outlook for AI investments remains supported by increasing adoption, improving returns, and rising capital expenditure. This trend has driven the rally in tech stocks, with companies investing heavily in AI infrastructure.
The drop in oil prices to below $100 per barrel also contributed to the positive market sentiment. West Texas Intermediate crude fell 0.47% to $95.33 per barrel, while Brent crude dropped 0.43% to $99.92 per barrel. The decline in oil prices was driven by signs of improving supplies from the Middle East, including a potential increase in exports from Saudi Arabia.
A senior Iranian official stated that Tehran could reopen the Strait of Hormuz, a critical waterway for oil exports, within seven days if the US eased military pressure and lifted sanctions on Iranian ports. Additionally, sources reported that Saudi Arabia had restarted its East-West pipeline and may resume exports from the Red Sea port of Yanbu.
Investors are now turning their attention to the upcoming meeting between US President Donald Trump and Chinese President Xi Jinping, which is expected to take place later in the week. The meeting has raised hopes of a trade agreement between the two nations and potential cooperation in the field of AI. However, no agreement has been reached on what will happen when the current trade truce expires in November.
The decline in oil prices and US bond yields has led investors to speculate about the future path of interest rates. While the US Federal Reserve has left the door open for further monetary tightening, investors are pricing in the possibility of another rate hike by major central banks. This could limit the decline in bond yields and impact the overall market sentiment.
In currency markets, the US dollar rose 0.17% against the euro to $1.1441, while the yen remained under pressure after the Bank of Japan raised interest rates to a 31-year high last week. The US 10-year bond yield fell 0.17 basis points to 4.961%, reflecting the market's expectations of future interest rate moves.
Key points
- The Nasdaq composite index reached a record high driven by AI optimism and strong corporate earnings.
- Oil prices dropped below $100 per barrel due to improving supplies from the Middle East.
- Investors are awaiting the meeting between US President Donald Trump and Chinese President Xi Jinping for potential trade agreements and cooperation in AI.
