European shares rose on Tuesday, with the pan-European STOXX 600 index gaining 0.3% to 640.28 points by 0719 GMT, according to Reuters. The modest gains were led by technology and semiconductor stocks, as investors responded to significant developments in the artificial intelligence sector. However, the broader market advance was constrained by rising crude oil prices and elevated bond yields, with markets awaiting key economic data releases for further direction. The tech sector surged 2.5% to a six-week high, significantly outperforming other market segments amid the AI-driven optimism. As per The Economic Times, Nasdaq futures edged 0.3% higher with chip stocks such as Micron and Advanced Micro Devices up about 1% in premarket trading, demonstrating continued momentum in global technology markets.
Technology stocks emerged as the strongest performers, with semiconductor shares gaining significantly following major developments in the artificial intelligence sector. Reuters reported that Anthropic's upcoming public debut could value the company at more than $2 trillion, with the AI company planning to spend $518 billion on cloud, computing and infrastructure. The planned offering is expected to value the company at more than $2 trillion, providing significant momentum to technology stocks amid ongoing AI sector developments. As per The Economic Times, Anthropic has really leapfrogged OpenAI and is really considered the market leader with significant excitement surrounding the IPO prospect. David Morrison, a senior market analyst at Trade Nation, noted that "Anthropic has really leapfrogged OpenAI and is really considered the market leader and there's a lot of excitement at the prospect of getting involved in the IPO." The company's $518 billion infrastructure spending plans could boost businesses of AI infrastructure companies such as semiconductors.
The broader market advance was restrained by a significant rebound in crude oil prices, with Brent crude futures slipping 0.9% to $104.3 a barrel, as reported by The Economic Times. The absence of a breakthrough in the Middle East conflict kept energy markets under pressure, with the higher oil prices creating headwinds for broader market performance. However, the latest data shows Brent crude futures standing at $106.99 a barrel, indicating continued volatility in energy markets. European energy companies responded positively to the oil price movements, but gains were limited by the elevated crude prices. Investors also weighed US and Iranian officials' renewed efforts to end the conflict, which continues to influence oil price dynamics.
Equities were trying to shake off the overhang from elevated bond yields in the face of the seven-month-old war in the Middle East and soaring debt issuance both from governments and global AI companies. Yields on French 10-year bonds were pinned near 2008 highs at 4.74% and were set for their biggest monthly rise since 2022, while US 10-year notes were hovering near 19-year highs at 5.21% and were on track for their biggest monthly jump since 2024. The higher rates pile pressure on government, corporate and household budgets, with September set to mark one of the heaviest bond selloffs in heavily indebted European economies and the US in the past few years. However, analysts such as John Plassard at Switzerland-based Cite Gestion suggest that strong employment, consumer spending, and AI capital expenditures are likely to prop up the US economy, potentially making it less sensitive to Federal Reserve interest rate hikes.
The dollar stood tall against major currencies, with the dollar index poised for its first monthly gain since June, as higher US yields and Middle East conflict uncertainty kept the greenback afloat. The dollar was trading at $1.1347 against the euro and 157.28 per Japanese yen. A US report on job openings in August is due later in the day and will kick off key US economic data this week that will be key drivers for Federal Reserve monetary policy. Investors see a 68.1% chance for a 25-basis-point hike in October, according to the CME Group's FedWatch Tool. Meanwhile, gold prices struggled to recover from a more than seven-week low at $4,150.59 per ounce due to higher yields limiting the non-yielding asset's rise, while bitcoin inched up 0.9% to $84,274.02, having retreated roughly 4% from its seven-month high. Australia's central bank lifted rates to a 15-year high, though the country's currency gave up some initial gains as some of the governor's comments were viewed as dovish.
