Asian and European stocks gain as oil slides, AI buzz lifts tech

On September 23, Asian and European stocks experienced an upward trend as oil prices declined for the sixth consecutive day, while a renewed interest in artificial intelligence (AI) propelled technology stocks worldwide. Saudi Arabia reportedly restarted operations at the East-West Pipeline and might have already resumed exports from the Red Sea port of Yanbu, according to Reuters.

US President Donald Trump reported that negotiations with Iran in New York were making progress, although he warned of potential consequences if a deal was not reached. Analyst Brock Weimer from Edward Jones suggested that both sides were nearing a point where it would be in their best interests to de-escalate the conflict and find a resolution.

Iranian President Masoud Pezeshkian was scheduled to address the UN General Assembly later on the same day, with markets closely monitoring the possibility of talks with Trump.

A sustained resumption of oil flows through the Strait of Hormuz would help keep inflation in check, which would, in turn, influence the global interest rate outlook. However, caution remains as such optimism has been short-lived in the past. Smead Capital Management's CEO, Cole Smead, noted that they had witnessed similar starts and stops in the past.

The STOXX 600 index in Europe rose by 0.17 percent to 643.86 points, while Brent crude futures fell by 0.40 percent to $98.83 a barrel. On Wall Street, futures for the S&P 500 and the tech-heavy Nasdaq-100 increased by 0.10 percent and 0.03 percent, respectively. The MSCI Global Stock Index remained stable after four consecutive days of gains.

In Asia, stocks also gained as consumer demand for AI applications continued to support technology stocks. South Korean stocks rose by 0.9 percent, with Samsung increasing by nearly 1 percent. Taiwan's benchmark index climbed by 0.8 percent, nearing all-time highs. The data hardware sector benefited from strong consumer uptake of Meta's Muse agent, which topped US app download charts in the past two weeks.

Analysts are now eager to observe how a comparable product from Alphabet's Google Labs, called CC, will perform among consumers. Chinese President Xi Jinping was set to visit Washington, amid speculation that a trade truce between the US and China might be extended, and cooperation on AI could be possible. Japanese markets were closed for a holiday, but Nikkei futures were trading at 66,775, approximately 1,760 points above their level on September 18.

Chris Weston, head of research at broker Pepperstone, predicted a strong reopening in Japan the following day, with further declines in crude oil prices, stable interest rates and Treasuries, and all-time high performances in the Nasdaq cash and futures markets. The strong performance of "memory stocks" was attributed to another successful session for semiconductors, which had recorded six consecutive days of gains.

Additionally, demand for SoftBank's USD 10 billion (S$12.7 billion)-plus debt deal was robust, with indications of interest surpassing USD 20 billion, potentially making it one of the largest junk bond deals ever. The decline in oil prices contributed to an uptick in Treasury futures, keeping 10-year yields below the 5 percent pain barrier.

The Federal Reserve's Richmond and Boston presidencies, Tom Barkin and Susan Collins, respectively, expressed support for the recent interest rate increase due to inflation concerns. Higher interest rates led to the dollar achieving multi-week highs against the euro, sterling, and Canadian dollar, enhancing its technical outlook.

The euro settled at $1.1414, near a two-month low. Analysts pointed out that President Trump's call to ban US diesel exports could be detrimental to European inflation, as the zone heavily relies on US shipments of the fuel. The dollar strengthened against the yen at 157.76, with speculators wary of further Japanese intervention if the exchange rate surpassed 160.