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Global stocks clung to record highs on Monday 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 on Monday it had targeted a US base in response. Also on Monday, 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 Hezbollah. 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 0.43%, the S&P 500 fell 0.05%, and the Nasdaq Composite rose 0.11%.
The pan-European STOXX 600 index fell 1.1%. Nvidia unveiled a new chip on Monday 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. The MSCI All-World index fell 0.20% 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 7% to $97.43 a barrel.
Oil prices jumped and equities slid on Monday as Middle East peace talks stumbled and tensions mounted between Iran and the Unites States.
Crude futures shot more than five per cent higher as an Iranian news agency announced Tehran had suspended the negotiations with the United States via mediators.
The United States and Iran had traded strikes over the weekend and Tehran had insisted that any deal to end the war must cover Israel’s escalating offensive into Lebanon.
The report by the Tasnim news agency cited the breakdown of the ceasefire and clashes in Lebanon as the reasons for the halt in suspending dialogue.
After the United States and Israel launched strikes on Iran at the end of February, Iran effectively closed the Strait of Hormuz through which a fifth of the world’s oil and liquefied natural gas normally flow.
While a ceasefire has largely held since mid-April, traffic through the strait has been scant and negotiations have dragged on.
While Wall Street had been set for a higher open, the spike higher in oil prices turned the tide, with the three main indices sliding as trading got underway in New York.
Shares in Nvidia jumped more than four per cent, however, after the company unveiled earlier Monday in Taiwan a powerful laptop chip for Windows machines, staking its claim in the market for next-generation consumer PCs integrated with artificial intelligence.
The company’s graphics processing units are prized for processing-intensive AI applications, but the new RTX Spark chips will be central processing units that are the run personal computers.
These PCs will be positioned as tools that can easily run AI agents that can carry out tasks for users.
The Nvidia announcement helped fuel gains in tech and AI stocks in Asian trade.
Seoul led the rally jumping by more than four per cent, with shares in memory chip giant Samsung Electronics surged more than nine per cent, while rival SK hynix rose over two per cent.
“Investors continue to embrace the AI boom,” said independent markets analyst Stephen Innes.
“The reason is simple. Artificial intelligence remains the dominant engine of market psychology, and as long as Washington and Tehran continue to exchange draft proposals rather than missiles, investors appear willing to give diplomacy the benefit of the doubt,” he added.
Investor enthusiasm for AI-related stocks has helped drive stock exchanges to record highs in recent weeks despite the war in the Middle East, which has sparked inflation as energy prices soar and threatened to kill off economic expansion.
The dollar firmed against main rivals.
Elsewhere, EasyJet’s share price jumped more than seven per cent after the British no-frills airline denounced as “opportunistic” a possible takeover bid from a US private equity firm.
Castlelake, which owns 2.14 per cent of EasyJet, revealed late Friday that it was considering an offer for the carrier, which operates mainly across Europe.
EasyJet slammed what it called the “highly opportunistic timing” by Castlelake after falls to its share price and deeper losses after the Middle East war sent jet fuel costs rocketing.
Agencies
