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Markets climb as AI optimism outweighs Middle East tensions

Asian equities advanced on Wednesday, with Japanese and South Korean stocks reaching fresh record highs as investor enthusiasm over artificial intelligence continued to outweigh concerns about renewed US military action in Iran. Wall Street had already set the tone on Tuesday, with the S&P 500 and Nasdaq closing at record highs as chipmakers rallied strongly, while European equities lost some momentum amid profit-taking and geopolitical caution. Chinese stocks lagged despite a sharp rise in industrial profits in April, underlining continued concerns about uneven growth in the world’s second-largest economy. The US dollar was slightly weaker midweek, while gold prices also slipped a bit and US Treasury yields retreated from recent high levels.

  • Data
  • Autore Shane Strowmatt, Senior Investment Writer
  • Tempo di lettura 5 minuto

Market chart
© Shutterstock

Asia-Pacific equities advanced on Wednesday, with Japan’s Nikkei 225 rising 0.6% to a record high and South Korea’s Kospi jumping 3.2%, as investors weighed renewed US military action in Iran against hopes for a Washington-Tehran agreement. South Korean shares were also supported by a 5.4% gain in Samsung Electronics after workers approved a provisional wage deal, easing concerns about disruption to global chip supplies. Meanwhile, South Korean chipmaker SK Hynix rose more than 11% on Wednesday, pushing its market value above USD 1 trillion. Australia’s S&P/ASX 200 added 0.5%.

China industrial profits accelerate

Chinese stocks lagged, with China’s CSI 300 trading 0.7% lower and Hong Kong’s Hang Seng Index falling 1%. Macroeconomic data released on Wednesday showed China’s industrial profits rose 24.7% year-on-year in April, accelerating from 15.8% in March and marking the fastest gain since November 2023. Profits for the first four months of the year increased 18.2%, up from 15.5% in the first quarter, driven by strong earnings growth in electronics, mining and petroleum processing as higher producer prices and crude oil prices supported upstream industries. The improvement was uneven, however, as automobile profits fell 16.8% in January to April and furniture manufacturing profits dropped 54.4%, underscoring continued weakness in consumer demand and the property sector.

S&P 500 and Nasdaq hit records

US stocks ended mixed on Tuesday, with the S&P 500 rising 0.6% to 7519.12 points and the Nasdaq 100 climbing 1.8% to a record 30,001.32, while the Dow Jones Industrial Average fell 0.2% to 50,461.68. Sentiment was supported by continued enthusiasm over artificial intelligence and hopes for progress in talks related to the Iran conflict, even as fresh attacks in Iran and Lebanon clouded the outlook. Chipmakers led gains, with memory chip company Micron surging almost 20% to top a USD 1 trillion market capitalisation. Shares in space-related companies also rose on optimism linked to SpaceX’s planned initial public offering.

US consumer confidence slips in May

US consumer confidence fell to 93.1 in May, according to data released on Tuesday, from an upwardly revised 93.8 in April, as higher prices linked to the Middle East conflict weighed on sentiment. The Present Situation Index dropped to 121.2 from 124.4, while the Expectations Index rose to 74.4 from 73.4, although it remained below the threshold often associated with recession risks. Consumers grew less positive about current business and labour market conditions, while inflation expectations stayed elevated and more households reported cutting back spending or delaying purchases. The report also showed rising concern about a possible US recession over the next 12 months, even as travel intentions and demand for some discretionary services improved modestly.

Euro-area stocks lose momentum

Euro-area equities fell on Tuesday, with the Euro Stoxx 50 dropping 1.2% after recent gains, as US military strikes on Iran made investors more cautious and prompted profit-taking. The pullback followed optimism on Monday that the US and Iran could reach a framework agreement, although the index remained above the 6000-point mark. Outside the euro area, markets in London and Zurich extended gains missed during Monday’s holiday, with Switzerland’s SMI edging up 0.2%.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from Salesforce.

Economic data in focus: Richmond Fed Manufacturing Index (16:00).

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Editor: Alessandro Fezzi
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