Stocks rose on Tuesday as confidence returned about peace talks taking place between Iran and the United States in Pakistan ahead of the end of a two-week ceasefire, against a backdrop of renewed enthusiasm on AI underpinning demand.
Investors will also be watching a Senate confirmation hearing later for Kevin Warsh, U.S. President Donald Trump’s nominee to lead the Federal Reserve, which Trump has repeatedly criticised for failing to cut rates sooner and more aggressively.
Oil prices traded a touch lower on the day, around $95 a barrel.
The MSCI All Country index rose 0.15 per cent on the day, nearing last week’s record high, driven by gains on Wall Street, but also on Asian markets, where South Korea’s Kospi hit an all-time high.
The latest catalyst was Amazon saying on Monday it will invest up to US$25-billion in Anthropic. Much of the enthusiasm about the build-out of AI and the spending that could feed a boom in economic activity was dampened over the first weeks of the Iran war.
But as the biggest companies behind that story prepare to release earnings this week, investors are back to focussing on the nuts and bolts of corporate fundamentals.
“It’s an environment where you see more capex than in the past three decades. And that has an impact on business conditions, corporate life, profits, etc. And at the core of this cycle is obviously tech,” Lombard Odier chief economist Samy Chaar said.
“The private sector is doing well, tech is doing well. Of course, what’s happening in the Middle East and energy is a very big story. But everyone is on the move to try to dampen and offset parts of that.” The mood in Europe, where companies are more exposed to possible disruption to fuel supplies and higher import prices than those in the United States, was more cautious. The STOXX 600 tilted into positive territory, as gains in tech stocks like ASML, the region’s largest by market value, and SAP , helped offset losses in pharma and defence.
Trump was due to give an interview on CNBC at 8:30 a.m. ET on Tuesday.
No Iranian delegation has yet departed for Pakistan, Iranian state TV reported on Tuesday, denying international news reports announcing the travel of Iranian representatives to Islamabad and scheduled times for talks with the U.S.
Brent crude prices were down 0.5 per cent on the day around $95 a barrel, while the dollar drew in some safe-haven flows, rising modestly across the board. U.S. stock futures were up 0.5 per cent to 0.6 per cent, suggesting a bounce-back for the S&P 500, which closed lower on Monday on worries over whether the U.S.-Iran ceasefire would hold, while the Nasdaq Composite snapped a 13-day winning streak, its longest in more than three decades.
Warsh’s confirmation hearing before the Senate panel is scheduled to begin at 10 a.m. EDT, with his independence from the Trump White House expected to be in focus.
“The Q&A has the potential for market moving if he provides any insights into his latest thoughts on the economy and policy settings in light of the recent energy price shock,” MUFG currency strategist Lee Hardman said.
“U.S. rate market participants are of the view he will leave the door open for rate cuts later this year justified by the potentially disinflationary impact of higher productivity growth. If he sounds more hawkish than expected, it could offer some near-term support for the U.S. dollar.”
The euro was last down 0.2 per cent at $1.1767, while the pound dipped 0.1 per cent to $1.352. The risk-sensitive Australian dollar eased 0.2 per cent to $0.7165, while the yen weakened to 159.13 against the dollar, which rose 0.16 per cent.
The yield on the U.S. 10-year Treasury bond was up 1.2 basis points at 4.26 per cent.
Reuters