Global equity markets extended their rally Thursday, fueled by tech sector momentum, strong AI-related earnings, and heightened expectations for a rate cut next week. Yet beneath the optimism lies a complex macroeconomic picture, with risks, geopolitical uncertainty, and sector-specific divergences demanding close investor attention.
Wall Street’s Momentum: Oracle Powers Another Record Close
U.S. equities continued their upward trajectory after the and closed at fresh record highs Wednesday. Oracle (NYSE:) led the surge, jumping 36% after securing multiple billion-dollar AI contracts. U.S. stock futures reflected sustained bullish sentiment, with the and up 0.1%, while traded flat.
The rally underscores investors’ faith in AI-driven growth, with Oracle’s earnings reinforcing optimism around corporate investment in advanced computing infrastructure. This surge has become a recurring theme: companies providing AI hardware, cloud infrastructure, and chip design capabilities are dominating capital inflows.
Tech Leadership Extends to Asia: China and Japan in Focus
Asia-Pacific markets mirrored Wall Street’s enthusiasm, with AI and semiconductor names driving gains:
- Cambricon Technologies surged 13% in Shanghai, signaling growing competition for Nvidia (NASDAQ:) in AI chip design.
- SMIC, China’s largest contract chip manufacturer, climbed 8.6%, benefiting from domestic tech resilience.
- Japan’s closed at a new record high, rising 1.2%, while SoftBank Group jumped 10%.
South Korea’s rose 0.9%, reflecting investor confidence in Asia’s semiconductor-heavy markets. The performance highlights a regional strategy pivot: investors are increasingly seeking exposure to supply-chain players capable of competing with U.S. giants.
European Markets: Oil Gains Offset Cautious Monetary Policy
European equities posted modest gains, with the up 0.2%. majors BP (+1.4%) and Shell (+0.9%) rallied despite ’s slight dip, underscoring energy’s defensive qualities in volatile markets.
However, expectations are muted ahead of Thursday’s European Central Bank (ECB) meeting, where policymakers are likely to hold rates steady. Limited forward guidance reflects the ECB’s cautious stance amid fragile Eurozone growth and lingering inflationary pressures.
Rates and Inflation: The Fed’s Balancing Act
The rose slightly, with the up 0.1% to 97.895. Treasury yields also advanced, with the at 4.052%.
Economists expect August to climb to 2.9% YoY from 2.7% in July. While traders anticipate a 25-basis-point cut next week, speculation of a 50-bp cut has faded. A modest rate reduction aligns with the Fed’s goal of easing financial conditions without reigniting inflation—an approach mirrored by the ECB’s cautious stance.
Commodities: Gold Holds Record Levels, Oil Steadies
prices slipped but remained above $3,600/oz, reflecting persistent safe-haven demand amid geopolitical uncertainty. Brent crude’s consolidation follows a three-day rally sparked by tensions in Europe and the Middle East, while copper’s pullback to $9,991.50/ton after surpassing $10,000 signals concerns over slowing global industrial activity.
Bitcoin Strength: Risk Appetite Rising
surged to a two-and-a-half-week high of $114,452, reinforcing investor appetite for high-beta assets amid declining real yields and easing liquidity conditions. Crypto markets continue to track global risk sentiment, particularly in response to central bank policy shifts.
Key Market Metrics
Asset/Class | Latest Level | Move (Daily) | Context |
S&P 500 Futures | Up 0.1% | 23rd record close this year | AI-driven momentum |
Nasdaq Futures | Up 0.1% | Record close | Tech rally leadership |
Oracle ($ORCL) | $177.80 (approx.) | +36% | AI contracts boost |
Nikkei 225 | 1.2% higher | New record | SoftBank +10% |
DXY Index | 97.895 | +0.1% | USD modestly stronger |
10-Yr Treasury Yield | 4.052% | +2.1 bps | Higher yields ahead of CPI |
Brent Crude | $82.60/bbl (approx.) | Slight dip | Geopolitical risk premium |
Gold | $3,600+/oz | Slightly lower | Near all-time highs |
Copper (LME) | $9,991.50/ton | -0.2% | Slowing demand signs |
Bitcoin | $114,452 | 2.5-week high | Risk appetite indicator |
Forward-Looking Scenarios
Bullish Case:
- AI-driven growth continues to support tech equities globally, driving capital inflows into U.S. and Asian semiconductor markets.
- A moderate Fed rate cut eases borrowing costs without triggering a resurgence in inflation.
- Energy sector resilience and rising crypto valuations sustain risk sentiment, with commodities providing a hedge against uncertainty.
Bearish Case:
- CPI surprises to the upside, forcing the Fed to maintain a hawkish stance and reducing expectations for rapid cuts.
- Geopolitical risks in Europe and the Middle East escalate, driving volatility in energy markets.
- Overstretched valuations in tech lead to profit-taking, sparking sector-wide pullbacks.
Investor Takeaways
Markets are pricing a Goldilocks scenario: AI innovation, steady monetary easing, and manageable inflation. While the Fed’s upcoming decision may validate this optimism, upside risks to inflation and geopolitical uncertainty warrant caution.
Investors should consider:
- Sector Rotation: Balance AI and semiconductor exposure with defensive energy and precious metals.
- Currency Positioning: USD strength may be short-lived if rate cuts accelerate.
- Commodities as Hedge: Gold and copper remain key indicators of macro sentiment.
- Crypto as Risk Gauge: Bitcoin’s momentum may signal broader risk-on positioning but is prone to volatility.