Stocks rally as investors snap up tech shares at lower prices

European stocks were higher on Tuesday, bolstered by gains in Asia and US markets, as investors awaited October US inflation data. In early trading, the UK’s FTSE 100 rose 0.73%, France’s CAC 40 climbed 1.20%, and Germany’s DAX increased 1.14%. US futures edged higher, while oil prices fell. Russ Mould, investment director at AJ Bell, noted the remarkable turnaround in investor sentiment.

Previously, AI-linked firms led gains in Asia after last week’s Democratic sweep of Congress raised regulatory concerns. However, traders remained cautious about profitability due to heavy investments in the sector. Nvidia’s shares rose 1% in pre-market trading despite speculation of a foreign intelligence investigation into CEO Jensen Huang.

Tech giants like Amazon, Microsoft, and Apple also performed well on Monday, driven by bargain-hunting and confidence in the AI outlook. Taiwan Semiconductor Manufacturing Co.’s October revenue rose 59.7%, while TSMC’s Taiwan stock index jumped 2.5%. South Korea’s Kospi surged 4.5% following strong gains in chipmakers SK hynix and Samsung, while Japan’s Nikkei 225 closed 2.9% higher.

SoftBank Group’s shares jumped 13.9% ahead of earnings, recovering from their lowest level in a year. Australia’s S&P/ASX 200 climbed 1.1%, while India’s markets were closed for a holiday. SPI Asset Management’s Stephen Innes warned that the rally did not indicate a return to robust markets, as capital expenditure cheques outperformed the businesses receiving them.

The US dollar rose to 157.91 Japanese yen, and the euro fell to $1.1249, while oil prices retreated on hopes of ending the Iran war, with both main contracts down over 2.5%.