Global stocks rise as AI shares stabilise

Global stocks surged on Wednesday as AI-related shares stabilized and government bonds offered relief, with investors maintaining a cautious approach ahead of US inflation data. Tech shares in Europe led the gains, buoyed by a rebound in Asia and an optimistic outlook from chip equipment maker ASML, which rose 1.4%. The STOXX 600 in Europe climbed 0.5%, while the MSCI All-World index edged up 0.1%.

However, caution remained, as oil prices climbed due to attacks on two vessels in the Strait of Hormuz and Iran's deployment of new tactics to target ships, potentially disrupting energy supplies. Brent crude futures hit over $106.4 a barrel, their highest level in nearly two weeks. Geopolitics and AI remain the main market drivers, with little progress on the geopolitical front and a low likelihood of a deal before midterms.

Jefferies strategist Mohit Kumar noted that a deal seemed unlikely. Government bonds experienced some respite after a period of non-stop selling, as high energy prices and rising expectations for global interest rates kept them buoyant. The yield on 10-year Treasury notes fell 1 basis point to 5.21%, nearing its lowest in two weeks, while 30-year yields stayed steady at 5.56%.

US bank stocks struggled on Tuesday after mixed quarterly earnings from Citigroup and other competitors, affecting the broader market. S&P 500 futures were up 0.1%, while Nasdaq futures were down 0.2%. Investors awaited the US consumer price index for September, expected to show a rise in inflation due to energy and commodity costs.

Economists predicted headline inflation would accelerate to 3.6% in September, with core CPI rising 0.2% monthly. The Federal Reserve may consider raising its policy rate again this year to curb inflation, with a near-100% chance of a rise in December, according to money market data. New York Federal Reserve president John Williams suggested the Fed could raise rates once more, but saw no need for hikes in 2027.

The US dollar index was up 0.1% at 102.26, close to its highest since April 2025, while the euro and pound showed modest declines. China's producer prices rose at their fastest pace in over four years, while consumer inflation edged up, but weak domestic demand kept broader price pressures contained.