Global stock markets rose on Thursday, bolstered by robust earnings from technology companies, inching closer to historic highs as investors shifted focus from ongoing trade war threats to corporate profits and tech growth. The euro gained slightly after French Prime Minister Sébastien Lecornu successfully passed the first of two crucial votes of confidence.
As of this report, Dow futures rose by 0.1%, S&P 500 futures increased by 0.3%, and the Nasdaq was up by 0.4%.
In Europe, the Stoxx 600 index climbed, while Lecornu faced a confidence vote amid Nestlé's stock soaring over 8% after reporting a sales rebound and announcing plans to lay off 16,000 employees. The MSCI Asia stock index gained 0.9%.
S&P 500 futures were up 0.3%, and Nasdaq 100 futures rose 0.4%, following a revenue growth target increase and heightened capital expenditure expectations from Taiwan Semiconductor Manufacturing Company (TSMC). AI-related tech giants in the U.S., including Nvidia, Micron Technology, and Broadcom, saw pre-market strength.
TSMC CEO C.C. Wei noted that AI demand is "stronger than anticipated three months ago," raising the revenue growth forecast for 2025 from approximately 30% to a range in the mid-30% range, while maintaining a capital expenditure plan of up to $42 billion for this year.
TSMC's performance underscores that leading semiconductor manufacturers are positioned to be one of the biggest beneficiaries in the upcoming $1 trillion AI investment wave over the next few years. Market optimism suggests that even with renewed trade tensions, investors remain hopeful about corporate prospects.
"We see ongoing capital investment, and AI technologies are being adopted continuously," said UBS Global Wealth Management multi-asset strategist Anthi Tsouvali. "The stock market should continue to rise. However, I don't believe this is a straight line upwards."
After months of relative calm, tensions between China and the U.S. are intensifying again, causing significant volatility in the stock market as investors oscillate between selling off and buying on dips. Investors are closely monitoring China's latest expansion of rare earth export controls. Senior U.S. officials criticized the move on Wednesday, warning that it could disrupt global supply chains.
The latest development is that U.S. Treasury Secretary Scott Bancen stated that the U.S. might extend the grace period if China pauses its planned rare earth export controls.
Chris Turner, global markets chief at ING, remarked, "What financial markets are concerned about is whether China's proposed rare earth export controls are merely a bargaining chip to extract more concessions from the U.S."
Joseph Capurso, head of foreign exchange at Commonwealth Bank of Australia, suggested, "Rather than reach a comprehensive agreement to resolve all trade issues, extending the current grace period might be a more pragmatic 'second-best outcome' than escalating retaliations."
Even amid renewed trade tensions, corporate earnings reports serve as a reminder to investors that the stock market fundamentals remain strong as the Federal Reserve considers interest rate cuts. So far this week, 78% of S&P 500 companies that have reported earnings exceeded market expectations.
Fabiana Fedeli, Chief Investment Officer for equities, multi-asset, and sustainable investment at M&G Investments, stated in an interview, "Investors have become increasingly accustomed to political fluctuations; they now realize that unless these events genuinely harm corporate profits—which are the core drivers of risk-on markets—they won't fundamentally impact the stock market."
Political risks in France have eased slightly, and U.S. Treasury yields are stable, with two-year yields nearing a low for 2025. U.S. Treasury yields linger around multi-week lows, with ten-year yields slightly above 4%, which has pressured the dollar. Meanwhile, investors are assessing the potential impacts of a prolonged U.S. government shutdown.
The Fed's Beige Book released on Thursday indicates signs of economic weakness in the U.S., including increased layoffs and reduced spending by low-to-middle-income households, limiting support for interest rates. Federal Reserve Governor Stephen Milan remarked on Wednesday that "rate cuts have become more important now."
After four consecutive days of gains that pushed regional borrowing costs to multi-month lows, the European bond market showed signs of cooling. The second confidence vote for French Prime Minister Sébastien Lecornu is approaching, followed by a bond auction in France.
Michael Metcalfe, State Street's head of global macro strategy, noted that markets generally expect stability in France. Lecornu has pledged to delay raising the retirement age, making it likely to pass the confidence vote.
"For now, they've reached some sort of compromise that temporarily removes the risk of early elections," Metcalfe said, adding that markets are now also observing whether the dollar will weaken again. "Has dollar sentiment stabilized, or is this modest rebound merely a reflection of rising political uncertainty outside of the U.S.?"
The dollar has declined for the third consecutive day, with the dollar index, measuring the dollar against six major currencies, down 0.05% at 98.63, projected to decline by about 0.3% for the week.
Shinichiro Kadota, head of forex and rates strategy at Barclays Tokyo, commented, "Regardless of the outcome of the prime ministerial election, markets will likely factor in some level of fiscal expansion expectations."
He added, "We remain bullish on the dollar against the yen, considering the risks of further appreciation, but we are also closely monitoring potential intervention risks from Japan or the possibility of the Bank of Japan raising rates."
Gold Prices Hit New Highs
Oil prices rebounded from five-month lows. Brent crude futures rose 0.4% to $62.13 per barrel, while U.S. WTI crude futures increased by 0.7% to $58.69 per barrel. Former President Trump stated on Wednesday that India would halt oil imports from its largest supplier, Russia, while Washington seeks to disrupt Moscow's energy revenues and compel negotiations over Ukraine.
Meanwhile, gold prices surged to $4,242, reflecting an increase of more than 60% this year, driven by escalating trade tensions and expectations of further rate cuts by the Fed attracting buyers.
Nitesh Shah, commodity strategist at WisdomTree, remarked, "Reignited trade tensions have added uncertainty to global supply chains... investors are increasingly turning to gold." He added that the gold breakout reflects market concerns over the credibility of U.S. policy and indicated that gold could likely remain above $4,200.
Key Stocks of Focus
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