Strong demand for technology stocks lifted equity indexes around the world yesterday and oil prices edged down on reports of ships moving through the Strait of Hormuz while investors awaited the outcome of a high-stakes US-China summit.
In bonds, benchmark 10-year Treasury yields pulled back from an 11-month high as US government debt found support from falling oil prices and buying interest at key technical levels.
Oil prices fell slightly after Iran’s state media said about 30 vessels had crossed the Strait of Hormuz in recent hours while the semi-official Fars news agency cited a source saying Iran had begun allowing transit for some Chinese vessels.
While Britain’s pound weakened on uncertainty about its political leadership, the dollar climbed for a fourth straight day after economic data kept expectations intact that the Federal Reserve was unlikely to adjust interest rates this year.
In Beijing, China’s Xi told Trump that trade talks were making progress at the start of their two-day summit but cautioned that disagreement over Taiwan could send relations down a dangerous path and even lead to conflict.
But helping to push the S&P 500 and the Nasdaq to fresh records was a rally in technology shares including heavyweight chipmaker Nvidia after Reuters reported the US has cleared about 10 Chinese firms to buy its second-most powerful AI chip, the H200. A 15 per cent surge in Cisco shares after its earnings report and job cut announcement also boosted sentiment in technology broadly, according to Garett Melson, portfolio strategist, Natixis Investment Managers.
“Investors are more worried about missing out on the upside than worrying about any sort of downside,” said Melson. “The path of least resistance is that the AI trade is really on fire right now. And there’s still evidence that investors are probably under risked, particularly to that complex that has just ripped to the upside.”
But he noted that elevated oil prices and the unresolved US-Israeli war on Iran are making for tough choices: “You get into this tension where you probably have some investors that are a little bit leery to add risk, but they feel the pressure to add risk just given that that portion of the market continues to power higher.”
On Wall Street, the Dow Jones Industrial Average rose 389.35 points, or 0.78pc, to 50,082.49, the S&P 500 rose 64.59 points, or 0.87pc, to 7,508.83 and the Nasdaq Composite rose 276.21 points, or 1.04pc, to 26,677.36. MSCI’s gauge of stocks across the globe rose 7.37 points, or 0.66pc, to 1,116.68. The pan-European STOXX 600 index rose 0.72pc.
In currencies the dollar was higher after retail sales for last month were in line with expectations. “It’s remarkable the extent to which there was no surprise in today’s print ... when we look at the fundamentals here, American consumers are still spending. They are telling pollsters that they’re more cautious, but at the same time, they’re not walking the talk,” said Karl Schamotta, chief market strategist at Corpay in Toronto.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.3pc to 98.76, with the euro down 0.31pc at $1.1674. Against the Japanese yen, the dollar strengthened 0.18pc to 158.14.
Sterling weakened 0.31pc to $1.348 as investors monitored an unfolding political crisis in Britain while data showed that its economy unexpectedly grew in March. Britain’s Prime Minister Keir Starmer is facing a potential leadership challenge after heavy losses in regional elections last week. While Health Minister Wes Streeting – seen as a possible successor – said he was resigning and had “lost confidence” in Starmer’s leadership, UK Education Minister Bridget Phillipson told reporters that Starmer has the support of his cabinet.
The British 10-year gilt yield fell 6.7 basis points to 5.002pc while the 2-year gilt yield fell 4.2 basis points to 4.437pc.
In US Treasuries, the yield on benchmark US 10-year notes fell 2.8 basis points to 4.451pc, from 4.479pc late on Wednesday while the 30-year bond yield fell 4 basis points to 5.004pc. The two-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 0.4 basis points to 3.986pc.
In energy markets, US crude fell 0.27pc to $100.75 a barrel and Brent fell to $105.07 per barrel, down 0.54pc on the day.
In precious metals, spot gold rose 0.01pc to $4,687.95 an ounce.
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