World stocks rally on AI optimism; jitters over Iran persist
Global Markets React to AI Developments and Geopolitical Tensions
By Amanda Cooper and Chibuike Oguh
NEW YORK/LONDON, June 2 (Reuters) - Global stocks rallied on Tuesday, buoyed by AI optimism, while oil prices edged higher amid rising uncertainty over a possible deal to end the U.S.-Iran war.
Geopolitical Uncertainty: U.S.-Iran Relations
U.S. President Donald Trump said talks with Iran continued. Iran is reviewing a proposed agreement with the U.S. to halt their war but has not communicated with Washington for a few days, Iranian media reported on Tuesday.
Brent futures rose 1.1% to settle at $96 a barrel, the highest since May 26.
AI Enthusiasm Drives Market Sentiment
IPO Activity and Investment in AI
AI ENTHUSIASM
Anthropic said on Monday it had confidentially filed for a U.S. initial public offering, edging ahead of rival OpenAI in a closely watched race to reach public markets. Google parent Alphabet is also seeking to raise $80 billion in equity to fund the expansion of its AI infrastructure.
Market Commentary
"This speaks to the huge sums involved in keeping pace in the AI arms race. It represents a significant shift from a period of bumper free cash flow to going cap in hand to the markets to help fund its expansion," said Russ Mould, investment director at AJ Bell.
Economic Data and Market Performance
On the economic front, U.S. job openings, a measure of labor demand, increased more than expected in April, hitting the highest level in nearly two years, according to Labor Department data.
That came after data showed on Monday that U.S. manufacturing beat expectations to hit a four-year high, likely driven by firms front-loading orders amid rising prices and supply concerns linked to the U.S.-Israeli war with Iran.
Expert Insights
"The jobs data was significantly higher than expected and you would think that it would have boosted rates but they didn't go up," said Gerry Sparrow, chief investment officer at Sparrow Capital Management.
"Employment is strong, which is a good thing for consumer spending. So I think the market is healthy because of the jobs data."
Regional Market Performance
U.S. and European Indices
On Wall Street, all three indexes finished higher after losing ground in early trade. The Dow Jones Industrial Average rose 0.45%, the S&P 500 gained 0.13%, and the Nasdaq Composite rose 0.03%.
Europe's STOXX 600 was up 0.66%, as a strong forecast from chipmaker STMicroelectronics lifted technology stocks.
MSCI's gauge of stocks across the globe was up 0.43% after hitting a fresh record high.
Asia-Pacific Developments
In Taipei, Nvidia CEO Jensen Huang said the company had enough supply to support strong growth in central processing units and graphics processing units, but he acknowledged supply constraints remained a concern.
Currency and Commodity Markets
Foreign Exchange Movements
In currency markets, the dollar edged slightly higher. The euro was flat at $1.1629.
The Japanese yen weakened 0.17% against the greenback to 159.93 per dollar. Sterling strengthened 0.08% to $1.3462.
Interest Rates and Inflation
Data showed euro zone core inflation at 2.5% year-on-year in May, above expectations of 2.4% and April's 2.1%. Money markets price in a quarter-point European Central Bank rate hike this month, with at least one more by year-end.
The yield on the benchmark U.S. 10-year notes fell 3.2 basis points to 4.445%.
Commodities
Gold rose 0.09% to $4,487.49 an ounce.
(Reporting by Chibuike Oguh in New York; Additional reporting by Gregor Stuart Hunter in Singapore. Editing by Stephen Coates, Mark Potter, Tomasz Janowski, Aurora Ellis, Rod Nickel)
