Technology stocks returned to the spotlight on Tuesday as renewed enthusiasm around artificial intelligence supported risk sentiment, but the wider market struggled to gain momentum as oil prices climbed back above $100 and bond yields moved higher.
Meta was at the centre of the renewed AI trade after its shares surged more than 11% on Monday, their biggest daily increase in more than two years. The move helped lift other AI-linked stocks and restored some confidence in the sector following recent selling pressure.
Semiconductor shares were among the biggest beneficiaries. Intel rose 12.2%, Arm gained 17%, and AMD’s market value reached approximately $1 trillion, highlighting continued investor appetite for companies exposed to AI-related investment and computing demand.
However, the positive technology story was offset by renewed pressure from energy and rates. Brent crude rose 1.4% to $101.67 per barrel after briefly falling below $100 in the previous session. Oil remains around 12% higher this month, reinforcing concerns that energy costs could keep inflation elevated.
Those inflation concerns are feeding directly into interest-rate expectations. The Federal Reserve raised rates last week and indicated that its fight against inflation is not yet complete, while the U.S. 10-year Treasury yield climbed to around 4.969%, close to levels not seen since 2023.
In the FX market, the dollar continued to benefit from the higher-rate backdrop. USD/JPY rose about 0.26% to 157.7, near a three-week high, as traders reduced expectations for a faster pace of tightening by the Bank of Japan following last week’s rate increase.
European equities were slightly weaker, with the STOXX 600 down 0.2%, while Nasdaq and S&P 500 futures both slipped around 0.1%. Traders are now balancing renewed AI optimism against higher energy prices, tighter financial conditions and upcoming U.S.-China talks later this week.
