Global stocks hit records as AI demand overwhelms Middle East tensions
Global stock markets reached all-time highs Monday despite fresh military strikes in the Gulf, as investors continued to prioritize the artificial intelligence boom over geopolitical risk. The MSCI All-World index rose 0.13% to record levels, with markets from Tokyo to Seoul trading at or near peaks.
Oil prices surged nearly 3% to $94 a barrel after U.S. forces struck Iranian targets over the weekend and Tehran responded with counterattacks. Kuwait reported intercepting missile and drone strikes. The price spike reflected concerns that ongoing hostilities could disrupt shipping through the Strait of Hormuz, a critical energy chokepoint.
Negotiations between Washington and Tehran continue, with President Trump posting on social media that everyone should "just sit back and relax." Defense Secretary Pete Hegseth said Saturday the U.S. stood ready to restart attacks if a deal collapsed.
AI demand overrides geopolitical concern
The resilience of stock markets reflected investor focus on AI-driven growth rather than Middle East developments. South Korea's exports grew at the strongest annual rate in more than four decades in May, hitting a record $87.75 billion, driven largely by semiconductor demand. Nvidia Chief Executive Jensen Huang is delivering a keynote Monday at Taiwan's Computex trade show on AI and the island's central role in chip manufacturing.
European stocks fell slightly as energy gains were offset by losses in airline and defense shares. S&P 500 futures rose 0.3%, while Nasdaq futures climbed 0.5% after both benchmarks hit records last week.
Fed speakers and payroll data shape rate expectations
Oil's price climb pressured bond markets. U.S. 10-year Treasury yields rose 1 basis point to 4.46%, while German 10-year yields climbed 4.2 basis points to 2.98%.
Multiple Federal Reserve officials are scheduled to speak this week. The May payrolls report arrives Friday, with forecasts calling for 85,000 jobs added and the unemployment rate holding steady at 4.3%. Stronger-than-expected employment data would narrow odds of a rate cut.
Markets currently price in a 50-50 chance the Fed will raise rates by year-end. That expectation has kept the dollar firm, with the currency up 0.12% against the Japanese yen to 159.46-just below the 160 level where officials have previously intervened to support the yen.
Fed officials are expected to signal openness to both rate increases and cuts depending on incoming economic data, suggesting the central bank may gradually shift from an easing bias toward a neutral policy stance in coming months.
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