Global equity markets experienced a resurgence in tech sector enthusiasm on Thursday, with China potentially allowing limited access to Nvidia's H200 chips for its AI firms and SK Hynix's $28 billion U.S. share listing being significantly oversubscribed. This tech-driven optimism overshadowed renewed military tensions in the Middle East, where the U.S. and Iran exchanged strikes. All three major U.S. indices ended the day positively, with the Dow Jones Industrial Average climbing 0.27%, the S&P 500 rising 0.81%, and the Nasdaq Composite jumping 1.3%. The MSCI world stock gauge also increased by 0.72%.
Despite the Middle East conflict, oil prices retreated, with U.S. crude falling 2.3% to $71.83 a barrel and Brent crude dropping 2.5% to $76.05 per barrel. Investors, initially concerned about the impact of the conflict on critical shipping routes like the Strait of Hormuz, appeared to re-evaluate the immediate threat. Economic data in the U.S. was mixed; initial claims for state unemployment benefits decreased by 2,000 to a seasonally adjusted 215,000, suggesting labor market stability. However, existing home sales surprisingly dropped 2.4% to an annual rate of 4.09 million units, while home prices hit a record high, indicating affordability challenges.
The semiconductor sector was a key driver of market gains, propelled by robust demand for AI chips. The Philadelphia SE Semiconductor index rose 3% for the second consecutive day. Micron Technology surged 4.5% after announcing plans to invest over $250 billion in the U.S. by 2035 to meet AI chip demand. Applied Materials climbed 3.2%, and Sandisk surged 7.6%. Meta Platforms also saw gains on news of its plans to manufacture AI chips. Meanwhile, benchmark 10-year U.S. Treasury yields ticked lower to 4.547%, and the dollar index fell 0.08% to 100.94. Gold prices edged up 1.1% to $4,121.12 an ounce as oil eased. The Federal Reserve's June FOMC minutes, the first under new Chair Kevin Warsh, indicated growing concerns about inflation, leading markets to price in an approximately 87% probability of a Fed hike this year. New York Fed President John Williams downplayed expectations for a sustained rise in energy prices but remained non-committal on interest rate decisions.
