US stock futures rebounded and oil prices eased as the ceasefire in the Middle East appeared to hold.
Traders are also taking comfort that robust earnings will continue to power equities higher.
S&P 500 contracts climbed 0.4 per cent. Those for the Nasdaq 100 rose 0.6 per cent, leaving the index set to test new highs when the market opens.
Builders of processing and memory chips were among the biggest gainers in premarket trading. Later on Tuesday, a forecast from Advanced Micro Devices will offer new clues on whether the spending spree on artificial intelligence is sustainable.
Global bonds strengthened as Brent retreated 1.3 per cent to below $113 a barrel. The exception was the UK, where traders returned after a public holiday and caught up with Monday’s spike in global yields as money markets dialled up bets on interest rate hikes. The dollar held steady.
A flare-up of violence in the Middle East has injected fresh uncertainty after strong earnings from tech megacaps and gains in chipmakers pushed equities to a succession of records. Still, traders are taking comfort that a diplomatic push to solve the impasse continues, with Iranian foreign minister Abbas Araghchi saying that talks with the Americans were “making progress”.
“Earnings remain the fuel for the US rally,” Madison Faller, global strategist at JPMorgan Private Bank, told Bloomberg TV. “The next question is whether earnings strength can broaden beyond technology. Portfolios need more than just one sector carrying the market.”
In Europe, the Stoxx 600 rose 0.5 per cent. Anheuser-Busch InBev climbed more than 6 per cent on unexpectedly robust demand for beer. HSBC Holdings Plc fell 5.7 per cent after an earnings miss.
Intel advanced more than 3 per cent in early US trading. Apple Inc. has held exploratory discussions about using the firm and Samsung Electronics to produce processors for its devices. Crypto-linked stocks such as Circle Internet Group also strengthened as Bitcoin extended gains for May to nearly 6 per cent.
Relative calm returned to the Persian Gulf after US and Iranian forces exchanged fire Monday and Tehran launched missiles and drones toward the United Arab Emirates. The violence erupted after US president Donald Trump announced “Project Freedom,” which he described as a humanitarian effort to guide stranded neutral ships.
“Project Freedom is a way for the US to gain an upper hand in negotiations,” said Mohit Kumar, chief economist and strategist for Europe at Jefferies. “In the coming days, it would become clear whether the US can provide safe passage to the ships and hence can take a much tougher stance.” - Bloomberg
