Global stocks clung to record highs yesterday as strong corporate results, fuelled in part by artificial intelligence optimism, outweighed investor concerns over escalating US-Iran tensions that have pushed oil prices higher.
The US said it struck Iranian military sites at the weekend and Iran’s Revolutionary Guards said yesterday it had targeted a US base in response. Iranian news agency Tasnim said Iran is halting indirect negotiations with the US after Israel ordered troops to push deeper into Lebanon to battle Tehran-backed Hizbollah.
The fresh hostilities could complicate diplomatic efforts to end the three-month-long war.
On Wall Street, the benchmark S&P 500 was mostly flat but still near record highs as energy and technology stocks drove gains while consumer discretionary, materials and utilities led losers.
The Dow Jones Industrial Average fell 0.33 per cent, the S&P 500 was flat, and the Nasdaq Composite rose 0.14pc.
The pan-European STOXX 600 index fell 0.76pc.
“The Iran story continues to swirl around in the background and I think it’s pretty interesting and impressive that the market has been able to, not completely ignore it, but dismiss a lot of the noise,” said Amanda Agati, chief investment officer at PNC Asset Management Group in Philadelphia.
“Earnings growth and Q1 earnings season, and even the revisions for Q2, are looking really strong. And so I think it’s just sort of this interesting dynamic where usually the headlines are driving the market narrative, but this market is trying to price a path to peace, whatever that ultimately looks like.”
Nvidia unveiled a new chip yesterday that puts AI capabilities directly into laptops and desktop computers, raising the stakes in the battle for dominance among other semiconductor makers and technology companies.
AI giant Anthropic said yesterday it has confidentially filed for a US initial public offering.
The MSCI All-World index fell 0.10pc after hitting a fresh record high on the day.
“We are in an unusual period for the market where the fundamentals and technicals converge to drive markets higher, with strong earnings revisions and relentless buying,” said Mark Hackett, chief market strategist at Nationwide in Philadelphia.
“Equity markets have been largely immune to Iran news over the past several weeks because investors are afraid of being caught on the wrong side if a significant development occurs.”
Brent crude futures rose nearly 8pc to $97.23 a barrel.
Investors are eyeing commentary from a host of Federal Reserve speakers this week as well as major US data including the May payrolls report on Friday.
US manufacturing activity increased more than expected in May, hitting the highest level in four years, likely driven by businesses front-loading orders amid rising prices and shortages because of the war with Iran, Institute for Supply Management data showed yesterday.
The yield on benchmark US 10-year notes rose 5.3 basis points to 4.506pc.
In currencies, the dollar rose against major currencies including the euro and yen.
The euro was down 0.36pc against the dollar at $1.1617. The Japanese yen weakened 0.26pc against the greenback to 159.69 per dollar.
Against the Swiss franc, the dollar strengthened 0.79pc to 0.787. The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.28pc to 99.29.
Spot gold fell 1.55pc to $4,465.70 an ounce while bitcoin fell 3.86pc to $70,809.33.
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