New York (AFP) – Stock markets firmed Tuesday with the Nasdaq and S&P 500 hitting record highs in the United States, as oil prices retreated on easing supply worries, which helped temper concerns about rising government borrowing costs. On Wall Street, the technology-focused Nasdaq index advanced 0.5 percent to a new high, coming off a record set on Monday driven by AI enthusiasm. The S&P 500 also hit a new record after rising 0.6 percent. The brisk trading in New York stoked European stock markets, after gains across most Asian equity markets.
Oil prices were subdued as Gulf exports inch back toward pre-war levels, with the international benchmark Brent North Sea crude closing just above the psychological level of $100 a barrel. Oil’s decline “gave a boost to interest-rate sensitive stocks including real estate and consumer cyclicals,” said Dan Coatsworth, head of markets at AJ Bell. Arne Lohmann Rasmussen, a commodities analyst with Global Risk Management, noted that “Gulf exports excluding Iran averaged 19.2 mb/d in September, equivalent to 81 percent of pre-war levels” even though Iran is still curtailing tanker traffic through the Strait of Hormuz. But he added that “crude exports were back to 91 percent of pre-war levels, while refined product exports were only around 60 percent” — a supply cut that has sent fuel costs soaring.
In the UK, the average diesel price at the pump struck a record high last week, according to official data. There remains plenty of uncertainty among traders over the Middle East crisis, which is putting pressure on central banks to raise interest rates to combat energy-fueled inflation. That and other factors have pushed government bond yields up to levels not seen in decades, heightening worries about ballooning debt. Analysts say the race to build out AI data centers, servers, and chips has compounded that problem, with tech titans no longer able to rely on their vast piles of cash. Borrowing by firms including Google, Amazon, and Microsoft hit around $500 billion in the nine months since January, and Goldman Sachs expects a further ramp-up in 2027, to $1.2 trillion.
“This is not something that we’ve seen before,” said Chris Della Fave, senior vice president at the fundraising advisory firm Post Oak Group, who estimates that AI accounts for 25 percent of all corporate bond issuance — up from four percent two years ago. David Morrison, senior market analyst at Trade Nation, pointed to the fact that only the technology and energy sectors were trading higher than their 50-day moving average as being of concern. “Clearly, this is not indicative of a healthy bull market and there is a very real danger that a crack in the AI story could see stocks across the tech sector hit an air pocket which affects everything,” he said.
Sam Stovall of CFRA Research said that US equities were buoyed by expectations of another interest rate hike in October dropping. “This week is a pretty quiet week in terms of economic reports,” he said. “And the Fed doesn’t meet until the end of the month. So investors are focusing more on technicals right now.” He added that strong earnings were expected to boost markets further.
In company news, UK online fashion giant Asos saw its share price slump more than nine percent in London trading Tuesday after customers reportedly received a mobile notification claiming its systems had been hacked. In the United States, Paramount completed its takeover of Warner Bros. Discovery, uniting two of Hollywood’s most storied studios in a media empire spanning television, news, and cinema under the control of David Ellison. Skydance stocks closed down 2.7 percent on Wall Street.
– Key figures at around 2015 GMT –
New York – Dow: UP 0.5 percent at 51,521.28 points (close)
New York – S&P 500: UP 0.6 percent at 7,818.93 (close)
New York – Nasdaq: UP 0.5 percent at 27,599.79 (close)
London – FTSE 100: UP 0.4 percent at 10,541.69 (close)
Paris – CAC 40: UP 0.5 percent at 7,868.71 (close)
Frankfurt – DAX: UP 0.8 percent at 25,449.19 (close)
Tokyo – Nikkei 225: UP 1.1 percent at 70,683.98 (close)
Hong Kong – Hang Seng Index: UP 1.0 percent at 24,280.56 (close)
Shanghai – Composite: Closed for a holiday
Euro/dollar: UP at $1.1257 from $1.1217 on Monday
Pound/dollar: UP at $1.3275 from $1.3221
Dollar/yen: UP at 158.17 yen from 157.99 yen
Euro/pound: DOWN at 84.81 pence from 84.84 pence
Brent North Sea Crude: UP 0.3 percent at $100.58 per barrel
West Texas Intermediate: FLAT at $89.44 per barrel
© 2024 AFP
