Key facts
- Global stocks hover near record highs, led by technology shares.
- The S&P 500 and Nasdaq reached new record closing highs.
- Nvidia unveiled a new AI chip for personal computers.
- Micron Technology shares surpassed $1,000.
- Japan's Nikkei 225 index hit a record high above 68,000.
- Oil prices surged amid renewed Middle East tensions and potential supply disruptions.
- Brent crude futures approached $100 per barrel.
- U.S. crude exports reached a record 5.6 million barrels per day in May.
- The U.S. dollar strengthened significantly, reaching a two-month high.
- U.S. employers added 172,000 jobs last month.
- The Japanese yen fell sharply against the dollar, surpassing the 160 mark.
- Treasury yields retreated from recent highs due to strong jobs data.
Global stock markets are trading near record highs, with technology shares leading the advance, fueled by artificial intelligence optimism and strong corporate earnings. The S&P 500 and Nasdaq have reached new record closing highs, with the S&P 500 extending its winning streak to nine consecutive days. Nvidia's unveiling of a new AI chip for PCs significantly boosted its own shares and those of partners such as Microsoft, Dell, and HP. Micron Technology shares surpassed $1,000. Japan's Nikkei 225 index also hit a record high above 68,000, driven by AI and semiconductor stocks.
Amidst this tech-driven rally, geopolitical tensions in the Middle East have caused oil prices to surge. Brent crude futures approached $100 per barrel, with WTI crude climbing to $96.02, driven by renewed hostilities, including Iranian missile launches and U.S. strikes, and concerns about potential supply disruptions through the Strait of Hormuz. U.S. crude exports reached a record 5.6 million barrels per day in May, as refiners sought alternatives amid these disruptions. Russia's crude oil exports have also reached post-invasion highs. Qatar and the UAE are employing 'dark fleet' tactics for LNG shipments to navigate these risks. However, former President Trump's comments regarding Israel not deploying troops to Beirut and ongoing, albeit stalled, talks with Iran have led to some paring of oil gains and tempered immediate fears of a wider conflict.
On the currency front, the U.S. dollar strengthened significantly, reaching a two-month high, driven by stronger-than-expected U.S. jobs data, which added 172,000 jobs last month. This robust labor market data has bolstered expectations that the Federal Reserve may raise interest rates, causing Treasury yields to retreat from recent highs. The Japanese yen fell sharply against the dollar, surpassing the 160 mark, a level that has prompted warnings from Japanese officials and signals a potential policy shift from the Bank of Japan towards fighting inflation. European shares experienced a pause in their tech rally, with some indexes trading mixed or lower, influenced by factors like Broadcom's weak forecast and the ongoing geopolitical risks.
Market sentiment remains cautiously optimistic, with some analysts warning that the current rally, which has seen Wall Street indexes gain for nine consecutive weeks, may be fragile and prone to volatility. Options market metrics suggest investors are positioning for further upside rather than hedging against a downturn. However, the strong earnings picture, particularly in the tech sector, provides a solid foundation for continued market strength, though geopolitical risks and potential Fed policy shifts are key factors to watch. The U.S. services sector also showed increased activity in May, though input prices rose, leading some companies to implement hiring freezes.