Tech stocks rise on renewed AI fever, higher oil, bond yields temper rally

Technology shares experienced a surge on Tuesday, propelled by renewed optimism surrounding AI. Meta Platforms' Muse AI assistant, launched two weeks prior, garnered viral popularity and led to a significant increase in the company's stock price. The tech sector's resurgence after recent gloomy warnings from AI leaders reignited enthusiasm for the industry.

Semiconductors also performed well, with the STOXX 600 falling slightly. Among the notable gainers were AMD, Intel, and Arm Holdings, which reached a US$1 trillion valuation, and Intel and Arm Holdings saw increases of 12.2% and 17%, respectively. Research director Kathleen Brooks from XTB noted that widespread adoption of Muse could bolster demand for other AI tools, potentially benefiting the AI sector after a challenging period.

Investors are also closely monitoring the upcoming meeting between US President Donald Trump and Chinese President Xi Jinping, with hopes that the leaders can prevent further deterioration in relations. The high-stakes summit, set to take place in Washington, may lead to a renewed trade truce and potential cooperation in AI. However, the focus remains on the expiration of the current one-year trade truce in November.

Meanwhile, oil prices rebounded above US$100 a barrel, while bond yields continued their upward trend, contributing to the overall market's mixed performance.