U.S. stock index futures climbed on Monday, supported by gains in Nvidia and Microsoft following their latest AI initiatives as investors looked past lingering uncertainty surrounding Middle East tensions.
Nvidia rose 2.4 per cent in premarket trading after the world’s most valuable company unveiled a new chip, set for release this fall, which brings AI capabilities to laptops and desktops.
The chip is a result of a three-year partnership with Microsoft to “reinvent the PC” for the AI era, Nvidia CEO Jensen Huang said. Microsoft shares added 3.3 per cent.
Other PC chipmakers dropped. AMD and Intel fell more than 4 per cent each, Apple dipped nearly 1 per cent and Qualcomm tumbled 8.6 per cent.
The broader mood was somber and oil prices climbed after the latest attacks between the U.S. and Iran raised concerns over efforts to negotiate an end tothe three-month-old conflict.
Wall Street’s main indexes closed May at record highs, buoyed by hopes of an eventual end to the war and blowout first-quarter earnings. Optimism around AI has helped boost U.S. equities, but concerns over the economic impact from the hostilities remain.
“We think the next phase for market gains is likely to be characterized by a broadening of leadership beyond the mega caps, increased rotation within equities, and more frequent episodes of volatility as capital is reallocated,” UBS analysts said in a note.
Investors will turn to Friday’s jobs report ahead of Kevin Warsh’s debut policy meeting as chairman of the U.S. Federal Reserve this month, against the backdrop of rising inflation fears linked to the Iran war.
Traders have priced in a near 70 per cent chance of a quarter-point rate hike before the end of the year.
At 06:48 a.m. ET, Dow E-minis rose 223 points, or 0.44 per cent, S&P 500 E-minis added 20.75 points, or 0.27 per cent, and Nasdaq 100 E-minis were up 96.25 points, or 0.32 per cent.
AI-server maker Dell last week forecast strong results and focus will shift to Broadcom earnings on Wednesday. Broadcom is the second-largest U.S. chipmaker by market value after Nvidia.
Comments from a slew of central bank officials and a beige book report this week will also be watched before the Fed enters its pre-meeting blackout period on Saturday.
In other company news, Cadence Design Systems rose 7.1 per cent after launching an autonomous engineer for chip design, powered by Nvidia.
Taylor Morrison Home Corp jumped 22.1 per cent after Berkshire Hathaway agreed to buy the homebuilder for US$6.8 billion in cash.
Micron rose 5.5 per cent to US$1,022, topping the US$1,000 mark for the first time. Its shares have soared nearly 90 per cent in May.
Global stocks traded at record highs on Monday as the AI boom continued to drive demand, offsetting news of fresh attacks in the Gulf that challenged optimism about a reopening of the Strait of Hormuz and lifted oil prices.
While negotiators from Washington and Tehran are apparently working to hammer out a deal, U.S. President Donald Trump had been silent on their progress until posting that everyone should “just sit back and relax”.
Speaking on Saturday, Defense Secretary Pete Hegseth said the U.S. was ready to restart attacks on Iran if a deal could not be reached. On Monday, news emerged that U.S. forces struck Iranian targets over the weekend and Tehran had hit back, while Kuwaiti defences were reportedly intercepting missile and drone strikes.
Brent crude futures rose nearly 3 per cent to US$94 a barrel, which in turn prompted a selloff in government bonds, which have been hurt by growing expectations for interest rates to rise to combat any spikes in inflation.
The MSCI All-World index was up 0.13 per cent to trade around record highs, as markets from Tokyo to Seoul traded at or near all-time peaks, underpinned by avid demand for anything AI-related.
“Even though there have been attacks from both sides, the market is holding on to the fact that negotiations are ongoing, and an elusive Iran/U.S. deal to end the war in the Middle East and to reopen the Strait of Hormuz will still be found,” XTB research director Kathleen Brooks said.
“As the focus switches to a raft of macro releases later this week, investors will need to watch how this plays out, and any delay in reaching a deal could knock market sentiment,” she said.
The power of the AI rush was underlined by data showing South Korea’s exports grew at the strongest annual rate in more than four decades in May to hit a record US$87.75 billion.
Nvidia boss Jensen Huang kicks off the Computex trade show in Taiwan on Monday with a speech about AI in which he is expected to expound on his company’s latest product efforts as well as the island’s central role in the industry.
European stocks were down marginally on the day, as gains in energy shares were offset by losses in airlines and defence shares.
The inflationary pulse from oil continued to hamper bond markets as U.S. 10-year yields rose 1 basis point to 4.46 per cent, while yields on 10-year German debt rose 4.2 bps on the day to 2.98 per cent.
A host of Fed members are set to speak this week, while major U.S. data include the ISM survey of manufacturing and the May payrolls report on Friday.
Market forecasts are for a solid rise of 85,000 in employment, keeping the jobless rate steady at 4.3 per cent. Anything stronger would likely see the odds of a hike narrow further.
“The lineup of Federal Reserve speakers throughout the week should continue to reinforce a balanced two-way policy approach, with officials remaining open to both rate hikes and rate cuts depending on incoming data,” Pepperstone chief market strategist Chris Weston said.
“Consequently, expectations may build that the Fed gradually moves away from its easing bias and towards a more neutral policy stance in the months ahead.”
Markets imply a 50-50 chance the Federal Reserve will have to hike rates by year-end, which has helped the dollar remain firm against a range of currencies, most notably, the Japanese yen.
The dollar was up another 0.12 per cent against the yen at 159.46 , just below the 160 barrier that many believe could trigger another round of official intervention to boost the Japanese currency.
Reuters