Technology stocks rebounded on Thursday, with Taiwan Semiconductor Manufacturing reigniting market confidence in the resilience of AI demand. Meanwhile, metal prices retreated from historic highs. Following hints from Trump about a potential pause in response measures against Iran, Brent crude oil fell below $65 per barrel, cooling investor demand for safe-haven assets.
As of the latest update, Dow Jones futures were up 0.12%, S&P 500 futures gained 0.39%, and Nasdaq futures advanced 0.80%.
The technology sector propelled the Europe Stoxx 600 index up by 0.4%, setting a fresh record high, with chip equipment manufacturers leading the gains. ASML Holding surged over 7% in Amsterdam, identifying TSMC as its largest customer.
After this "AI bellwether" company announced plans to raise its 2026 capital expenditure by at least a quarter, up to a maximum of $56 billion, and forecast revenue growth exceeding market expectations, Nasdaq 100 futures reversed from losses to a 0.8% gain. S&P 500 futures also climbed 0.4%.
TSMC suppliers Applied Materials and Lam Research both saw pre-market increases exceeding 5%. The "Magnificent Seven" tech giants all traded higher, albeit with relatively more modest gains.
"TSMC's guidance suggests there's still room for upward revisions to market consensus and supports a more constructive outlook," said Gary Tan, Portfolio Manager at Allspring Global Investments.
"Wall Street is experiencing a sector rotation, which is ultimately weighing on the indices but also indicates the market's internal structure remains quite robust overall," commented Kyle Rodda, an analyst at Capital.com.
An example of improved market "breadth" is evident: the S&P 500 Equal Weight Index, which neutralizes the influence of overly heavy mega-cap stocks, has accumulated a 3.6% gain in January, while the standard S&P 500 index itself has risen only 1.1%. The small-cap Russell 2000 index has surged close to 7% for the month.
"We've seen a more pronounced rotation pattern since the start of the year, with the small-cap Russell 2000 index hitting a new record and outperforming the S&P 500 for the ninth consecutive session," stated Jim Reid, a strategist at Deutsche Bank.
The return of AI-related optimism comes as the market, after weeks of steady rotation away from large-cap tech stocks, shifts towards a broader range of companies benefiting from improved growth prospects. This trend led the S&P 500 to record its first back-to-back decline on Wednesday, even though most of its components advanced.
The yen weakened. U.S. Treasury and European government bonds saw slight, synchronized declines. Following the release of positive UK economic growth data, traders scaled back bets on Bank of England rate cuts in 2026. A general preference for riskier assets further contributed to the bond weakness, with the 10-year U.S. Treasury yield reported at 4.14%.
Foreign exchange markets stabilized, including for the yen. The yen hit its weakest level against the U.S. dollar since July 2024 on Wednesday, before paring some losses after Japanese authorities issued repeated verbal warnings hinting at potential intervention to support the currency.
Japanese Prime Minister Sanae Takaichi plans to call a snap parliamentary election as early as February 8th. Her spending plans have raised investor concerns about the government's fiscal sustainability; concurrently, the Bank of Japan appears more cautious about raising interest rates to curb inflation. Both factors have persistently weighed on the yen in recent months.
The euro edged lower to $1.1638; sterling hovered around $1.3443. The pound showed little reaction despite data indicating stronger-than-expected UK economic growth in November.
In a Reuters interview on Wednesday, Trump also stated he has no plans to fire Federal Reserve Chair Jerome Powell; the U.S. Department of Justice has initiated a criminal investigation into Powell. "Right now, we're in a bit of a wait-and-see situation with him, we'll decide what to do. But I can't elaborate, it's too early, far too early," Trump said.
Bitcoin traded near two-month highs. On Wednesday afternoon, Trump indicated that based on his information, killings during Iran's crackdown on nationwide protests were decreasing and he believed there were currently no plans for large-scale executions. This remark sent Brent crude futures down 3.3% on Thursday to $64.32 per barrel. In the previous session, Brent had reached a high of $66.82.
As the market perceived a reduced risk of "immediate action" regarding the Iran situation, the rally in precious metals that had driven prices to new highs cooled, with silver falling 2.7%; gold and platinum also declined. The weak sentiment spread to base metals, with copper prices dipping below $13,000 per tonne.
Spooked by Trump's mercurial demeanor! A $2.2 trillion giant is urgently reducing its U.S. asset holdings. Trump's "unpredictable" policies are prompting bond giant PIMCO to begin减持 U.S. assets to diversify investment risk.
Dan Ivascyn, the company's Chief Investment Officer, revealed that the fund manager, overseeing $2.2 trillion in assets, is adjusting its portfolio in response to the frequently shifting policies of the Trump administration, increasing asset diversity.
"The key is to recognize the reality: this administration's policy direction is highly unpredictable. Faced with this situation, what is our response strategy? The answer is diversification... We believe that in the coming years, the market will see a sustained trend of reducing U.S. asset holdings and advancing diversified allocation," Ivascyn stated.
Focus Stocks Optical communication stocks moved higher, with Lumentum up over 4%, Coherent gaining over 3%, and Astera Labs rising over 2%.
Memory concept stocks were broadly higher premarket, with SanDisk up over 3% following news that Bernstein raised its price target from $300 to $580; Micron Technology and Western Digital both gained over 2%.
ASML rose nearly 5% premarket, poised to open at a record high, buoyed by TSMC's strong results and bullish sentiment from J.P. Morgan.
Boston Scientific fell 4% premarket, while Penumbra soared 10%, as Boston Scientific announced it would acquire Penumbra for $14.5 billion.
Morgan Stanley rose over 2% premarket after reporting fourth-quarter net revenue that exceeded expectations.
Music streaming platform Spotify gained over 3% premarket after the company announced subscription price increases in the U.S. and other regions.
GE Vernova advanced nearly 2% premarket, with Bank of America anticipating strong Q4 order growth and adjusted EBITDA significantly surpassing expectations.
Eli Lilly dipped over 1% premarket, as the FDA is set to make a decision on the company's weight-loss drug on April 10th.
Biogen rose over 1% premarket, with Goldman Sachs optimistic that Leqembi and its R&D pipeline support structural changes for revenue and profit growth.
Rocket Lab fell nearly 2% premarket after KeyBanc downgraded its rating from "Overweight" to "Sector Weight".
Nokia climbed 4.4% premarket, having been selected to operate New Zealand's Connexa network and receiving an upgrade from Morgan Stanley to "Overweight".
Taiwan Semiconductor Manufacturing surged over 5% premarket, set to open at a record high, following Q4 results and a 2026 outlook that both surpassed expectations.
Beike gained 1.6% premarket amid further policy support for the real estate industry.
Dingdong Maicai rose 1.5% premarket after signing a partnership with SanLucar, with cherries and blueberries being the first products listed.
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