Global stocks were solid on Wednesday as strong results from semiconductor equipment maker ASML revived AI trading and helped offset concerns about the impact of new hostilities involving Iran and rising oil prices.
Europe’s STOXX600 index was just below parity by 1142 GMT, after rebounding a day earlier as softer-than-expected US inflation data eased concerns about rising interest rates, pushing down the dollar and yields.
Markets for high-tech industries in the US and Asia were strong.
Nasdaq futures rose 0.5% and S&P 500 futures rose 0.1%, pointing to a solid open on Wall Street as investors assessed a new wave of corporate earnings.
“The divergence between the U.S. and Europe appears to be primarily driven by tech stocks, which are once again outperforming,” said Ipek Ozkardeskaya, senior analyst at Swissquote. “The ASML results were excellent.”
The world’s largest chip-making equipment supplier raised its 2026 forecast and announced plans to expand production capacity after demand related to artificial intelligence exceeded its quarterly profit forecast.
The company’s shares rose as much as 8% on the Amsterdam market, helping to lift other AI stocks despite recent volatility amid concerns that valuations and AI spending expectations are outpacing fundamentals. They narrowed their gains, ending up 4% higher.
The MSCI World Price Index remained almost unchanged. The KOSPI index, which focuses on South Korean tech stocks, rose more than 6%, and in the Seoul market, memory chip maker SK Hynix rose 8.8%. Japan’s Nikkei Stock Average rose 1.5%.
On Tuesday, the U.S. headline consumer price index fell 0.4% in June, the first decline since the coronavirus pandemic, while core inflation was flat for the month.
Bond yields and the dollar fell on the news, with the euro steadying above $1.14 on Wednesday.
The two-year Treasury yield rose 2.4 basis points (bp) to 4.21% on Wednesday, but was still about 8 basis points below Tuesday’s 17-month high.
“For market bulls, this is even better than Goldilocks could have imagined,” JPMorgan analysts said in a client note.
“This article removes concerns about a July rate hike and may also ease concerns about a September rate hike. This could push the market higher and expand as the market expands.”
Further gains were capped after Federal Reserve Chairman Kevin Warsh told Congress that one good inflation reading was not enough to declare victory over inflation.
Investors will closely watch his testimony later Wednesday, along with U.S. producer price data and the Fed’s Beige Book, for further clues about the policy outlook.
In Europe, German two-year bond yields rose 1 basis point to 2.75%, but remained below Tuesday’s two-year high.
Revenue on the radar
Meanwhile, the U.S. earnings season continued its surprising upswing after some Wall Street banks’ earnings season got off to a strong start, boosting risk sentiment.
Morgan Stanley reported higher second-quarter profits on strong merger and acquisition activity despite macroeconomic uncertainty, sending the company’s stock up 2.8% in pre-market trading.
BlackRock also reported a jump in quarterly profits as a rising stock market boosted the value of customer assets and health care conglomerate Johnson & Johnson beat Wall Street expectations on sales and profits.
The Bank of Canada’s policy decision is also scheduled for later Wednesday, with the benchmark interest rate widely expected to remain unchanged. The Canadian dollar was broadly stable above 1.40.
Oil prices rose on Wednesday as President Donald Trump reimposed a naval blockade on Iranian ports and threatened to shut down export corridors benefiting the United States and its allies.
Brent futures rose 0.7% to $85.3 per barrel.
China’s annual economic growth slowed sharply to 4.3% in the second quarter, lower than analysts expected as weak domestic demand outweighed strong production and exports.
A recovery in China’s retail sales in June, relatively strong nominal GDP, and expectations for authorities’ response were positive factors for investors.
“I don’t think they’re worried enough to announce a big stimulus package, but it will be targeted because they recognize that growth is only in tech and the overall performance of the economy continues to be weak,” UOB economist Wuei Chen Ho said.
The Chinese yuan traded at 6.771 yuan to the dollar, just below its one-month high.
Spot gold prices fell 0.6% to $4,029.3 an ounce, matching some of Tuesday’s more than 2% jump as higher oil prices heightened inflation concerns and uncertainty over the outlook for U.S. interest rates.
(Reporting by Danilo Massoni in Milan and Tom Westbrook in Singapore; Editing by Sharon Singleton and Timothy Heritage)
