World stock markets reached new all-time highs on Monday, with the ongoing artificial intelligence boom driving buying interest, which offset news of renewed attacks in the Gulf region. These attacks dampened market optimism about the reopening of the Strait of Hormuz and pushed oil prices higher.
Despite apparent efforts by Washington and Tehran negotiators to finalize an agreement, U.S. President Donald Trump had remained silent on the progress until recently, when he posted that everyone should "just watch and wait, and relax."
U.S. Defense Secretary Pete Hagerty stated on Saturday that the United States is prepared to resume strikes on Iran if a deal cannot be reached. Reports on Monday indicated that U.S. forces conducted airstrikes on Iranian targets over the weekend, with Iran retaliating. Additional reports suggested Kuwait's air defense systems were intercepting missile and drone attacks.
Brent crude futures rose nearly 3% to $94 per barrel, triggering a sell-off in government bonds. Market expectations for interest rate hikes increased to curb inflationary risks, putting pressure on bonds.
The MSCI World Index gained 0.13%, nearing its historical peak. Markets in Tokyo, Seoul, and others also reached or approached record levels, with AI-related assets being fervently pursued.
"Despite the reciprocal attacks, the market is still betting that negotiations will continue, believing a difficult U.S.-Iran agreement will ultimately be reached—one that ends the Middle East conflict and reopens the Strait of Hormuz," said Catherine Brooks, Research Director at XTB.
"A series of macroeconomic data releases are due later this week, and investors need to closely monitor developments. Any delay in the agreement negotiations could dampen market sentiment," she added.
The strength of the AI wave was reflected in South Korea's May export data, which showed a year-on-year growth rate hitting a more than forty-year high, reaching $87.75 billion, a historical record.
Nvidia President Jensen Huang is scheduled to deliver a speech at the Computex computer exhibition in Taiwan on Monday, focusing on AI. He is expected to detail the company's latest product developments and Taiwan's central role in the global AI supply chain.
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European stock markets edged lower: energy stocks rose, but the aviation and defense sectors weighed on the broader market.
S&P 500 futures rose 0.3%, and Nasdaq futures rose 0.5%; both benchmark indices had just set new record highs last week.
Inflationary pressures from oil prices continued to weigh on bond markets: the yield on the U.S. 10-year Treasury note rose 1 basis point to 4.46%; the yield on the German 10-year bund rose 4.2 basis points to 2.98%.
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