World stocks climb on chip rally; dollar steadies near one-year high
Semiconductor chips are seen on a circuit board of a computer in this illustration picture taken February 25, 2022. REUTERS/Florence Lo/Illustration
NEW YORK, June 25 : Global stocks rose on Thursday as strong earnings from chipmakers lifted sentiment, although investors remained wary about stretched valuations for AI-related shares, while the dollar hovered near a one-year high.
The benchmark S&P 500 ended flat while the Dow rose on Wall Street, led by industrials, healthcare and materials stocks.
Micron was up 15.7 per cent after the memory chipmaker's solid forecast helped to extend its AI-driven ascent.
Qualcomm rose 3.8 per cent after reporting that it expects $15 billion a year in sales from its data center business by 2029.
The Nasdaq closed down, however, pulled lower by choppy trading among most megacap technology stocks. Apple lost 6.1 per cent while Microsoft shed 3.5 per cent.
The Dow Jones Industrial Average rose 0.14 per cent, the S&P 500 ended flat, and the Nasdaq Composite fell 0.46 per cent.
AI VALUATIONS, INTEREST RATES DRIVE SENTIMENT
Investor concern that valuations of AI-related companies have become stretched after years of gains has weighed on markets in recent days, leading to volatile sessions.
Markets are also pricing in higher interest rates from the U.S. Federal Reserve and other central banks.
"If you took the tech sector alone against the S&P 500 excluding technology going back to 2000, we are about 2.8 standard deviations away from the average," said Marc Dizard, chief investment officer at Huntington Wealth Management.
"When you get the magnitude of that move, it's not surprising to us that we would get a little bit of a pause, some consolidation and rebalancing where investors are taking profits off the table."
In Europe, the broad STOXX 600 rose 0.80 per cent. MSCI's gauge of stocks across the globe rose 0.37 per cent.
"Technology is a long-duration asset as the story plays out, not necessarily in the next six months. And when you have the Fed come out with a more hawkish tone, long-duration assets are going to sell off in that time period," Dizard said.
U.S. inflation data on Thursday broke above 4 per cent annually for the first time in three years as the Middle East conflict boosted energy prices, but the monthly reading was slightly below expectations, helping to push yields lower.
The yield on benchmark U.S. 10-year notes fell 0.59 basis point to 4.394 per cent. The 2-year note yield fell 1.2 basis points to 4.125 per cent.
OIL BACK TO PRE-WAR LEVELS
Oil prices edged higher but were still near levels last seen before the start of the U.S.-Israeli war with Iran, as expectations of rising supply from the Middle East outweighed demand concerns.
Brent crude futures settled up 2 per cent at $75.26 a barrel.
In currencies, the dollar fell against major peers but remained near its highest level in a year.
The euro was last at $1.137, a whisker above Wednesday's 13-month low, while the Japanese yen was near its lowest in 40 years against the dollar, with more intervention widely expected from Tokyo after the last bout around May did not stem the currency's decline.
The yen was flat against the greenback at 161.80 per dollar.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.15 per cent to 101.45.
Gold rose as the U.S. dollar fell. Spot gold rose 0.64 per cent to $4,026.09 an ounce.
