LONDON/SYDNEY :Shares climbed globally on Tuesday, fuelled by optimism around all things AI luring money into technology stocks, while bets on U.S. interest rate cuts lifted gold to a record high.
The EURO STOXX 600, which have tended to lag in the rush to tech stocks, gained 0.4 per cent, boosted by utilities, with German and French indexes climbing 0.5 per cent and 0.7 per cent respectively.
Dutch chip equipment maker ASML dropped 1.2 per cent, however, keeping gains in check.
On Monday, Wall Street was led to another record as Nvidia announced it would invest up to $100 billion in OpenAI with the first data centre gear to be delivered in the second half of 2026.
The seemingly inexorable rise in tech stocks attracted money from momentum funds and option players, and fuelled gains for wider indexes.
BIG TECH DRIVES GAINS, BENEFITS WIDER INDEXES
“It’s been the Magnificent 7 driving the gains,” Deutsche Bank analysts wrote, referring to seven dominant tech companies that have driven the U.S. stock market’s growth.
“The profile of U.S. equity gains is looking very much like 2023 and 2024 again, where the annual gains are being driven by a very narrow group of stocks.”
Chris Weston, head of research at broker Pepperstone, noted that investors were hedging their exposure to stocks by buying gold.
The metal hit a record at $3,759.02 per ounce, and was nearly 9 per cent higher for the month so far.
S&P 500 futures were little changed, while Nasdaq futures slipped 0.3 per cent, after hitting new peaks overnight.
Investors were also focused on impending comments from U.S. Federal Reserve officials including Chair Jerome Powell later in the day, to assess the U.S. central bank’s monetary policy trajectory after it cut interest rates last week.
BOND YIELDS RECOVER AS DATA SHOWS GERMAN ACTIVITY SPED UP
Euro zone bond yields erased losses after the release of data on the region’s business activity. The benchmark 10-year German yield moved to 2.75 per cent, flat on the day, after data showed that activity grew in Europe’s largest economy an accelerated pace in September.
In Asia, chip sectors have benefited from the demand for tech stocks, with South Korean stocks up 0.5 per cent, having surged over 9 per cent this month.
Japan’s Nikkei was closed for a holiday but has climbed 6.5 per cent so far in September, while Taiwan has risen almost 7 per cent.
Chinese blue chips recovered losses to trade flat, its liquidity-fuelled bull run petering out in recent days.
MSCI’s broadest index of Asia-Pacific shares outside Japan eked out a miniscule daily gain, and is still 5.5 per cent higher on the month.
MIXED MESSAGING FROM FED, DOLLAR CONTINUES TO SEE-SAW
Equities globally have been underpinned by expectations of a series of further rate cuts from the Fed following last week’s easing.
Futures imply around a 90 per cent chance of a further quarter-point rate cut in October, and a 75 per cent probability of an easing in December as well.
Markets remain doggedly dovish despite mixed messaging from the Fed itself. Speaking on Monday, new Fed Governor Stephen Miran argued for sharply lower rates, but three of his colleagues said the central bank needed to remain cautious about inflation.
In currency markets, the dollar continued its recent see-saw pattern, easing overnight after three sessions of gains.
The euro was steady at $1.179, after bouncing from a $1.1726 low on Monday, while the dollar had faded to 147.72 yen from a high around 148.37.
Sweden’s crown held steady at 9.34 per dollar after the central bank cut interest rates to 1.75 per cent and said rates were expected to remain on hold for some time.
Oil prices struggled as concerns of oversupply outweighed geopolitical tensions in Russia and the Middle East.
Brent eased 0.4 per cent to $66.27 a barrel, while U.S. crude slipped 0.3 per cent to $62.02 per barrel.
