Technology stocks drove markets higher across the world on Wednesday as artificial intelligence-linked shares regained momentum following weeks of volatility, aided by a second consecutive US inflation report showing price pressures cooling faster than expected.

Major Indexes Gain on Inflation Relief

The S&P 500 rose 0.4% in early Wednesday trading and was on pace for a fourth gain in five sessions. The Dow Jones Industrial Average edged up 57 points and the Nasdaq composite climbed 0.6%. Treasury yields fell in the bond market as the morning’s producer price data — showing wholesale inflation dropping 0.3% in June — reinforced Tuesday’s consumer price report and together reduced the likelihood of near-term Federal Reserve rate hikes.

AI-linked tech stocks, which have been among the most volatile sectors in recent weeks on concerns about whether the returns on massive infrastructure investment can justify elevated valuations, led the day’s gains.

Morgan Stanley Posts Record Quarter, Banks Shine

Morgan Stanley shares rose 2% in premarket trading after the bank reported record second-quarter revenue of $21.3 billion and record profit of $5.6 billion. The results followed a string of strong earnings from major US banks on Tuesday, with most crediting their trading desks for the outperformance. Banks have benefited from the heightened market volatility that has characterized trading since the Iran war began in late February.

Iran Threatens to Block All Gulf Energy Exports

Despite the broadly positive market tone, gains were capped by geopolitical risk. Iran’s Revolutionary Guard issued a stark warning Wednesday threatening to halt all energy exports from the Middle East in retaliation for the US resuming its blockade of Iranian ports. “The export of oil and gas from the region will be either for everyone or for no one,” the statement read.

Brent crude, the international benchmark, rose 63 cents to $85.36 per barrel, and US benchmark crude gained 46 cents to $79.80. The threat underscored the fragility of energy markets as shipping through the Strait of Hormuz — through which roughly a fifth of global oil and gas flows — remains severely disrupted.

“The US-Iran Memorandum of Understanding signed last month has proved to be anything but,” said Tim Waterer, chief market analyst at KCM Trade. “The two sides are once again exchanging military strikes, and they hold completely different views on the state of affairs in the Strait of Hormuz. With shipping around the Gulf becoming increasingly fraught with danger, traffic flows are declining once more.”

Asian Markets Rebound Sharply, Europe Mixed

South Korea’s Kospi surged 6.2% to 7,284.41, leading gains in Asia as semiconductor stocks rebounded sharply from a recent selloff. SK Hynix rose 8.8% and Samsung Electronics climbed 6.3%. Japan’s Nikkei 225 advanced 1.5% to 68,751.51. Australia’s S&P/ASX 200 gained 0.4% and Hong Kong’s Hang Seng edged up 1.4%.

China’s Shanghai Composite slipped 0.3% after the government reported that China’s economy expanded at a 4.3% annualized pace in the April-June quarter — a sharp deceleration from 5% in the first quarter.

European markets were softer. France’s CAC 40 dipped 0.2%, Germany’s DAX shed 0.8%, and Britain’s FTSE 100 declined 0.2%.

Author: Staff Writer | Edited for WTFwire.com | SOURCE: AP News