Global stocks rise as AI shares stabilise

Global stock markets experienced a modest increase on Wednesday, buoyed by a stabilization in shares of companies involved in artificial intelligence (AI) and government bonds. Investors maintained a cautious stance, staying clear of excessive volatility as they awaited US inflation data later in the day. European technology stocks led the day's gains, capitalizing on a renewed performance in Asia, particularly from Samsung Electronics and SK Hynix, as well as a positive outlook from Dutch chip equipment manufacturer ASML, which saw a 1.4% rise.

The STOXX 600, a European stock market index, climbed by 0.5%, while the MSCI All-World index edged up by 0.1%. Despite this overall optimism, market sentiment remained guarded due to rising oil prices following attacks on two vessels in the Strait of Hormuz and Iranian officials' announcement of new tactics to target ships, threatening potential disruptions to energy supplies. Brent crude futures, already near their highest level in nearly two weeks, surged over 0.5% to US$106.4 a barrel.

Geopolitical tensions and AI remain the primary catalysts for market movements. Progress on the geopolitical front appears limited, with a deal appearing increasingly unlikely before the midterm elections. Strategist Mohit Kumar from Jefferies acknowledged the low probability of even a partial resolution. Government bonds experienced a brief respite after several weeks of rapid selling, as high energy prices and rising expectations for global interest rates pushed them higher.

The yield on benchmark 10-year Treasury notes fell by 1 basis point to 5.21%, nearing its lowest level in two weeks, while 30-year yields held steady at 5.56% after three days of declines.

Investors were anticipating the release of the US consumer price index (CPI) for September, which is projected to have risen, driven by stronger energy and commodity costs. Economists forecast that headline inflation would have accelerated to an annual 3.6% in September, while the core CPI would have increased by 0.2% on a monthly basis.

Money market data suggests a roughly 20% probability of a Federal Reserve (Fed) interest rate hike later this month and a near-100% chance of a rate increase in December. The US dollar index, which measures the value of the dollar against six other major currencies, remained stable at 102.26, close to its highest level since April 2025.

The euro was slightly weaker at US$1.118, and the pound remained unchanged at US$1.326. Meanwhile, China reported producer prices rising at their fastest pace in over four years, while consumer inflation ticked up last month, though weak domestic demand kept broader price pressures from escalating further.