Asian stock markets experienced a significant upswing on Thursday, driven by impressive earnings reports and optimistic forecasts from key players in the semiconductor industry, specifically Micron and Qualcomm. This positive news has somewhat eased investor apprehensions regarding the unprecedented AI market surge that has propelled global stock indices to their highest levels.
In pre-market trading, S&P 500 futures climbed by 0.5%, while Nasdaq futures saw a more dramatic increase of 1.8%.
"Tech stocks received a vital boost after Micron's earnings report was released," noted Tony Sycamore, a market analyst at IG. He emphasized that the data is hinting at a potential cooling in market positioning, which could pose challenges to technology's current momentum in the near future.
Concerns have risen among investors regarding the stretched valuations of companies associated with AI, following years of significant market gains. This unease has contributed to recent periods of volatility in stock trading.
Despite this backdrop, analysts express skepticism about the sustainability of the AI stock rally, as worries about valuations persist. "Micron's results are a positive development," commented Nick Twidale, chief market strategist at ATFX Global in Sydney. He anticipates a notable advancement in market performance driven by these earnings but cautions about the longevity of this optimism across the broader tech sector. "Valuation apprehensions are likely to continue influencing sentiment in the times ahead," he added.
In related news, oil prices took a downturn as tankers that had been stranded in the Strait of Hormuz began to leave, following a temporary agreement aimed at resolving tensions between the U.S. and Israel over Iran. Brent crude saw a 0.5% decline, settling at $73.34 a barrel, edging closer to pre-conflict price levels, while U.S. West Texas Intermediate dropped 0.38% to $70.07 a barrel.
This decline in oil pricing may help alleviate some inflationary pressures, but the potentially ongoing elevated price levels are likely to prompt the U.S. Federal Reserve to consider raising interest rates, with market participants anticipating at least one increase this year.
Expectations surrounding the upcoming Personal Consumption Expenditures (PCE) inflation report suggest that core prices for May may reflect a growth of 0.3%, leading to an annual increase of 3.4%. Overall inflation for the same month is projected at 0.5%, with a year-over-year rate of 4.1%.
As a result of rising rate hike expectations, the dollar has gained strength, putting the Japanese yen in a precarious position near a 40-year low, with looming risks of intervention by Japanese authorities. The yen was trading at 161.73 per U.S. dollar, nearing last week’s two-year low of 161.96, a level that, if breached, would mark its lowest since 1986.
The dollar's strength is also impacting gold prices, which have now fallen below $4,000 per ounce for the first time since 2026. Spot gold was last priced at $3,990 per ounce, approaching its lowest point since November.
The information was reported by Ankur Banerjee in Singapore, with editing by Kate Mayberry.
