Global equities hit record highs as US tech rebound gains momentum

Global equity markets climbed to fresh record highs, supported by a strong rebound in US technology stocks. The recovery in the tech sector has helped ease investor anxiety that had weighed on sentiment in recent weeks, driven by concerns over excessive spending linked to the development of artificial intelligence.

The MSCI All Country World Index, one of the broadest gauges of global equities, rose 0.2 per cent to a new high, while Asian markets advanced 1.1 per cent, also reaching record levels. Gains were led by technology shares, with companies such as SoftBank among the standout performers. The rally, however, remains under scrutiny, as US and European equity futures edged lower, pointing to a period of consolidation after recent advances.

In currency markets, the yuan strengthened to its highest level since May 2023, amid reports that Beijing has urged domestic banks to curb their holdings of US Treasuries. The dollar was little changed, while gold retreated after two days of gains, weighed down by profit-taking in a market still marked by volatility and a lack of clear direction. Silver also declined.

The renewed strength in equities suggests a moderation of fears surrounding the so-called AI trade, which had recently hit software stocks and capital-intensive technology groups particularly hard. Market participants note that the recent bout of volatility has helped clear excess positioning and bring valuations back to more sustainable levels, laying the groundwork for a healthier market phase.

Investor focus is now shifting to upcoming US economic data, notably employment and inflation figures, which are expected to play a key role in shaping expectations for the Federal Reserve’s next moves on interest rates.

Against this backdrop, Bloomberg strategists highlight that the yuan’s appreciation and China’s gradual shift away from US sovereign debt underscore a broader global trend towards diversification away from the dollar - a development that could have lasting implications for international financial markets.

Andrea Pelucchi