Global stock markets are trading in a narrow range near all-time highs, with artificial intelligence (AI) trading continuing to dominate market sentiment. Stronger-than-expected U.S. inflation data has further reinforced bets on Federal Reserve interest rate hikes. Amid these intertwined factors, the market lacks a clear directional bias.
On Thursday, European stocks opened broadly higher. The Euro Stoxx 50 index rose 0.75%, the UK's FTSE 100 gained 0.10%, France's CAC 40 advanced 0.69%, and Germany's DAX climbed 1.16%. South Korea's KOSPI index closed up 1.75%, setting another historic closing high. Samsung Electronics surged 4.23%, also achieving a record closing price.
Simultaneously, Cisco Systems issued a robust sales outlook, with its shares soaring 20% in after-hours trading, further boosting the AI investment theme. The U.S. Producer Price Index for April surged 6% year-over-year, marking the fastest pace since 2022, strengthening market expectations for future Fed rate hikes.
European equities opened collectively higher, with the Euro Stoxx 50 up 0.75%, the FTSE 100 up 0.10%, the CAC 40 up 0.69%, and the DAX up 1.16%. South Korea's KOSPI index closed up 1.75%, reaching a new historical closing high. Samsung Electronics closed up 4.23%, achieving its highest closing level on record. S&P 500 futures rose 0.2%. The U.S. Dollar Index was largely unchanged. The yield on the 10-year U.S. Treasury note was little changed at 4.47%. Japan's 10-year government bond yield rose 4 basis points to 2.630%. Brent crude oil traded around $106 per barrel after falling 2% in the previous session; West Texas Intermediate (WTI) crude traded near $101 per barrel. Spot gold rose 0.2% to $4,696.98 per ounce. Bitcoin edged up 0.1% to $79,756.57.
AI Theme Leads, Tech Stocks Lift Sentiment Artificial intelligence trading remains the core market theme. Following Cisco Systems' better-than-expected sales outlook, its stock price skyrocketed 20% in after-hours trading, further solidifying market expectations that AI-driven spending will continue to fuel growth.
European stocks opened broadly higher. The Euro Stoxx 50 index rose 0.75%, the UK's FTSE 100 gained 0.10%, France's CAC 40 advanced 0.69%, and Germany's DAX climbed 1.16%.
In Asian markets, South Korea's KOSPI index closed up 1.75%, setting another historic closing high; Samsung Electronics surged 4.23%, also achieving a record closing price. Global stock markets have repeatedly hit new highs recently, with strong corporate earnings and expectations for AI-related capital expenditure providing primary support, somewhat tempering market concerns about inflation.
U.S. Inflation Exceeds Expectations Again, Rate Hike Bets Intensify Inflation data from the United States represents another key variable for the current market. Data from the U.S. Bureau of Labor Statistics showed the Producer Price Index (PPI) rose 6% year-over-year in April, the fastest pace since 2022, driven by a surge in energy prices and exceeding economist forecasts. This follows earlier consumer price data that also came in hot. This series of data prompted markets to significantly increase bets on Fed rate hikes next year, with the 10-year U.S. Treasury yield briefly reaching its highest level since July on Wednesday.
Chris Low of FHN Financial stated, "Firms haven't fully passed on costs to consumers yet, but input costs for businesses have risen sharply, which clearly increases the pressure to do so in the future."
On the Federal Reserve personnel front, the U.S. Senate confirmed the nomination of Kevin Warsh as Chair by a narrow majority. This is seen as one of the most contentious leadership changes at the Fed in decades and a test of its political independence.
Bond Markets Under Pressure, Commodities Experience Volatility In bond markets, the yield on the 10-year U.S. Treasury note edged down 1 basis point to 4.46%, with Australian government bonds also rising. The Japanese government bond market, however, faced significant selling pressure, with the 30-year JGB yield rising 10 basis points to 3.915%, its highest level since 1999.
In commodities, Brent crude oil traded around $106 per barrel after falling 2% in the previous session; West Texas Intermediate (WTI) crude traded near $101 per barrel. The U.S. dollar held largely steady on Thursday after strengthening for three consecutive days.
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