Global Stocks Get AI Boost, Investors on Tenterhooks Over Middle East Peace Talks
Japan's Nikkei jumped 3.7% on fresh evidence of heavy AI infrastructure spending, even as AMD and SpaceX slid on cash flow worries.
Global equities edged higher on an artificial intelligence-driven boost, with investors awaiting signs of progress in negotiations between the United States and Iran.
Japan's Nikkei rose 3.7% to its highest since July 23 after fresh evidence of heavy spending on AI infrastructure, while South Korea's market continued its volatile run to close 3.8% higher. MSCI's broadest index of world shares rose 0.4%.
In Europe, the pan-European STOXX 600 was last up 0.1%. Drugmaker Novo Nordisk, one of the region's biggest companies by market value, fell 4.2% as disappointing sales of its Wegovy weight-loss pill overshadowed a strong second-quarter earnings beat. HSBC shares dropped nearly 3% a day after its results.
US President Donald Trump said his administration had "very good discussions" with Iran during all-day negotiations, fuelling hopes the five-month conflict could be nearing an end.
Not all the mood was upbeat. Chipmaker AMD fell 7% in premarket trading after dropping 8.8% after hours, as results that beat analysts' estimates failed to meet investors' lofty expectations. AI and satellite company SpaceX was down 10% on worries heavy capital spending was eating up its cash flow — a recurring concern across AI stocks given the cost of compute power and rising borrowing costs.
"SpaceX continues to execute strongly operationally, but its ambitious investment program means additional capital will almost certainly be required over the medium to longer term," said Chris Weston, head of research at Pepperstone.
Nasdaq futures were flat while S&P 500 futures added 0.3% after the benchmark hit all-time highs on Tuesday.
Sentiment was supported by weaker oil prices after Qatar said mediators were making progress. Brent rose more than 50 cents, or 0.7%, to US$79.95 a barrel — well below its July peak of US$102 — while US crude added 14 cents to US$75.90 following reports of attacks on a Saudi vessel in the Red Sea.
CBA energy economist John Oh said Strait of Hormuz flows may have reached 40% to 45% of pre-war levels last week, adding that traffic needed to return to only 50% to 60% to assert oversupply conditions.
The oil pullback eased inflation fears and boosted bonds, with 10-year Treasury yields at 4.606%. Markets cut the odds of a September Fed rate hike to 57% from 67%. Gold rose 2.2% to US$4,166 an ounce.
This article was produced with the assistance of artificial intelligence (AI), in accordance with our editorial policy.