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The world stock market rallies on AI optimism, but concerns about Iran continue
The global stock market rallied Tuesday on the back of AI optimism. Oil prices and bond yields also fell, as renewed hope grew for a U.S. Iran deal. Brent crude futures dropped 0.1% to?just under $95 per barrel, erasing sharp gains from the previous session, after U.S. president Donald Trump stated that talks with Iran continue. His remarks came despite reports that Tehran had suspended indirect talks with Washington for the end of hostilities. This has kept investors on edge about the efforts to end the war, which lasted three months. It also highlights the fragility and inadequacy of the ongoing ceasefire. AI ENTHUSIASM Anthropic announced on Monday that it had filed a confidential application for an initial public offering in the United States, beating rival OpenAI to public markets. Alphabet, the parent company of Google, is also looking to raise $80 Billion in equity to expand its AI infrastructure. This is a testament to the enormous sums required to keep pace with the AI arms race. Russ Mould said that it represents a major shift from a period where there was a lot of free cash to a time when the market is being asked to fund AI expansion. According to Labor Department figures released on Tuesday, U.S. jobs openings, which are a measure for labor demand, rose?more that expected in April and reached the highest level since nearly two years. This came after data showed that U.S. Manufacturing beat expectations to reach a four-year-high, likely due to firms front-loading their orders amid rising prices as well as supply concerns related to the U.S. and Israeli war on Iran. Gerry Sparrow is the chief investment officer of Sparrow Capital Management. He said that "the jobs data was higher than expected. You would have thought it would have increased rates, but they did not go up." "Employment levels are high, which is good for consumer spending." "I think the market is in good shape because of the employment data." Wall Street's three major indexes are trading higher, after initially losing ground. The Dow Jones Industrial Average grew by 0.30%. The S&P 500 grew by 0.24%. And the Nasdaq Composite climbed by 0.28%. STMicroelectronics' strong forecast boosted technology stocks, resulting in a 0.71% gain for Europe's STOXX 600. MSCI's global stock index was up by 0.48%, after reaching a new record high. Nvidia's?CEO Jensen Huang told reporters in Taipei that the company had enough supplies to support a strong growth of central processing units and graphics processing unit (GPUs), though he acknowledged that supply constraints were still a concern. The dollar has been slipping on the currency markets. The euro, which is still 1.5% below the level it was at the beginning of World War II, rose 0.04% in the last trading session to $1.16365. The Japanese yen fell 0.14% to 159.85 dollars. The pound rose 0.19% to $1.3477. The euro zone core inflation rate was 2.5% in May, which is higher than the 2.4% expected and April's 2.1%. Money markets are pricing in a quarter point?European Central Bank interest rate hike this week, and at least one more by the end of the year. The yield on benchmark U.S. 10 year notes dropped 3 basis points to 4,447%. The yield on benchmark German Bunds for 10-years dropped 4 basis points to 2,973%. Gold increased by 0.46%, to $4,504,09 per ounce.
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Elon Musk and the SEC defend a 'compromise settlement' over Twitter purchases
Elon Musk, the U.S. The Securities and Exchange Commission (SEC) defended its?settlement regarding Elon Musk's purchase of Twitter shares by saying that it reflected compromises and wasn't tainted with collusion after the judge over the case stated the accord raised "red-flags." Musk described the settlement as a fair, reasonable and adequate resolution in which "each party gave up something and gained something," according a filing made Monday night at the Washington, D.C. federal court. The SEC said in a separate filing that Musk could publicly deny the accusations. This reflects a recent policy change governing defendants who resolve enforcement actions. A trust registered in Musk's name will be required to pay a civil penalty of $1.5 million to settle SEC allegations that the world's richest person took 11 too many days to disclose his Twitter share purchases in March and April 2020, which allowed him to buy shares at low prices before investors caught on. Musk claimed that the delay had been an accident. Musk paid $44 billion in October 2022 for Twitter and renamed the company X. His businesses include Tesla and SpaceX. U.S. district judge Sparkle Sooknanan stated at a hearing on May 13 that she couldn't "rubber-stamp" the settlement. She questioned why the SEC had fined the trust and not Musk, and was only able to recover 1% of Musk's $150 million in alleged ill gotten gains. She said that she would also consider whether or not the settlement was in the public's interest and if it had been tainted with collusion or corrupt practices. SEC SAYS SETTLEMENT BENEFITS PUBLIC Musk and SEC both said that the settlement was not the result of "improper collusion" and was the result of negotiations conducted at arms' length. The SEC said that the $1.5m penalty was the highest of its kind, surpassing the $950,000 previous high. And settling with the Trust mirrored recent practices by the regulator. The SEC stated that the public would benefit from the injunction, which has the effect of binding Musk when he uses the Revocable Trust as an investment vehicle to manage his wealth. Musk said that he would have won a trial over the issue of whether an SEC with a political agenda?singled out him for enforcement? and targeted his right to free speech. He compared the fine to the $500,000 penalty that was imposed on billionaire Carl Icahn in 2024 for "far worse" conduct. Carl Icahn waited more than three year to disclose he had pledged a large majority of his Icahn Enterprises stock to obtain personal margin loans worth billions of dollar. Icahn Enterprises paid a separate $1.5 million penalty. Musk stated that "accepting a certain civil penalty, which is immediate and unprecedented, in exchange for the release of a legal doubtful claim, is a paradigmatic bilateral compromis." Musk was a former adviser for Republican President Donald Trump. The SEC filed a lawsuit against Musk six days before Democratic president?Joe Biden departed the White House. Paul Atkins, SEC chair, has refocused priorities as the Trump administration reduces corporate enforcement. Margaret Ryan, the former SEC enforcement head who left abruptly after only six months in March due to clashes over enforcement with SEC leadership. Reporting by Jonathan Stempel, New York; editing by Stephen Coates and Chizu nomiyama
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India tightens silver import rules, mandates prior approval
India tightened its restrictions on silver imports by adding powder and grain forms to the list of restricted categories, and requiring valid import authorizations. The world's largest consumer of the metal is trying to?reduce shipments and ease the pressure on the rupee. According to a government directive issued on Tuesday, imports of silver grains, powder and other forms containing 99.9% of silver are prohibited. Importers 'would have to obtain a valid authorization for import from the Directorate of Foreign Trade (DGFT) in order to import silver. India placed all semi-manufactured silver and silver bars of 99.9% purity under a restricted category last month. The government also increased import duties on gold and silver to 15%, up from 6%. This was done to "reduce overseas purchases" of these metals as well as to ease the pressure on foreign currency reserves due to higher oil prices. South Asia spent $12 billion in total on silver imports during the year ending March 2026 compared to $4.8 billion just a year before. India's silver exports in April grew 157% from a year ago to $411million, according to data released by the trade ministry. The government has made it more difficult for the silver industry to import. Importers must now get approval before they can import silver. It is unclear if or when this will happen. Silver is used for jewellery, coins, bars, and industrial applications from solar energy to electronic devices. Silver ETFs have seen record-high inflows, driven by investment rather than silverware and jewellery. India imports silver from the United Arab Emirates (UAE), Britain, and China. (Reporting and editing by Jonathan Ananda; Rajendra Jadhav)
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How long will ROI-Small caps be AI's biggest winners? McGeever
Many of the biggest winners from the current wave of AI mania lifting Wall Street to new ?highs aren't the multi-trillion-dollar hyperscalers, but small caps. Now the question is whether this can continue. Microsoft, Amazon Alphabet Nvidia, and other AI behemoths on the Nasdaq, S&P 500, continue to make headlines. As valuations reach ever higher stratospheric levels, investors are also anticipating the trillion-dollar?IPOs of Anthropic, and OpenAI. In the midst of all this, companies with market caps under $2 billion have experienced a stealth rise. The Russell 2000 index, which measures small-cap companies, is up 17% in the past year. This outpaces the S&P 500’s 10% increase. There have, of course, been notable exceptions. Oracle, a $700 billion cloud computing company, has seen its market capitalization nearly double in just two months. Dell, a $300 billion PC maker has also doubled in less that two weeks. The smaller players led the way this year in two main sectors: tech and energy. Small-cap indices have performed better than their megacap counterparts by a considerable margin. Small but Mighty The Russell 2000 energy index has risen by 34% since February 27, the day before the Iran war began. Russell 2000 Energy Index has increased by 13% since February 27, the day the Iran War started. The S&P 500 energy index, however, has only grown by 2%. Smaller companies are more likely to benefit from a spike in energy prices than their larger counterparts. This is because they tend to have a larger proportion of fixed costs, which means that a rise in oil will lead to an increase in cash flow. Although crude oil prices are down from their peak, they're still 30-35% above where they were in February 27. Small-cap performance has been more prominent in the tech sector. Russell 2000 Tech Index is up 45% compared to S&P 500 Tech index which has risen 25%. This outperformance was largely due to the last two month. Since March 30, the U.S. equity market bottomed, small-cap technology stocks have risen by an impressive 70%. The large-cap index has only risen by 45%. What is the explanation? The AI capex boom is benefiting small caps more than most expected. The tech sector may only make up 16% of small-cap index, compared to the "Magnificent Seven"'s near 40% share of S&P 500. However, many of these smaller firms are part of the physical segment of AI buildout. The hyperscalers are spending an estimated $800 billion on capital expenditures this year, which is flooding the AI ecosystem in areas such as equipment, energy, and AI testing. Keith Lerner is the chief investment officer of Truist Advisory Services. He notes that shares in over a dozen small cap semiconductor companies have risen by more than 100% this year. Lerner states that this shows how widespread and strong the?demand' has been. As for whether or not it will continue, there is still upside potential. This is particularly true if the bull markets remains intact and if AI-driven earnings cycles continues to expand. Small Firms, Big Risks However, small caps will face many challenges in the future. Companies with smaller balance sheets and weaker credit ratings, as well as lower market capitalizations, are more exposed to rising rates of interest than larger firms. At least for now, the increase in Treasury yields along the maturity curve that has occurred since the Iran War began is being offset by the?rising stock prices and decreasing credit spreads. Goldman Sachs U.S. Financial Conditions Index is at its lowest level in four years, due largely to the booming equity market. The inflation rate is rising, and the headline rates are approaching 4%. This means that borrowing costs could continue to rise. This will eventually 'curtail the equity bubble, tighten financial terms and put excessive pressure on small companies with high debt load. A pullback in AI capex could be a "double whammy" for many small tech firms, as it would affect them both directly and through a slower growth rate. If there is a solution to the Iran conflict, the energy prices may drop until the end of the year, wiping out the growth that smaller energy companies have experienced. Bank of America’s fund manager survey revealed that confidence?in small-cap rally could be ebbing. Net 54% of respondents now expect large-cap stock to outperform smaller-cap stocks. This is the highest percentage since June 2022. The small caps are on a roll. It remains to be seen how long they can keep it going. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. Follow ROI on LinkedIn and X. Listen to the Morning Bid podcast daily on Apple, Spotify or the app. Subscribe to the Morning Bid podcast and hear journalists discussing the latest news in finance and markets seven days a weeks.
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Indonesian business groups demand clarity on new commodity export rules
In a 'joint statement' received on Tuesday, business groups in Indonesia asked the government to provide technical guidance to its plan to centralise exports. The Indonesian Employers Association (IAA), along with associations of coal miners and nickel smelters, palm oil producers and miners, supported the new regulations, but expressed the hope that the government would collaborate with the private sector to implement them. They said that the government should "issue transparent technical guidelines" to eliminate negative speculative and maintain confidence on international markets in Indonesia as a global supplier of commodities. On May 20, President Prabowo announced that resource-rich Indonesia will centralise the exports of strategic commodities via a new company called Danantara Sumberdaya Indonesia. The first three commodities to be centralized are coal, palm oil, and ferroalloys. The transition period of the 'policy', which aims to?improve tax revenues and prevent export under-invoicing?, began on June 1. Its full implementation is planned for at least the beginning of next year. On June 1, rules requiring natural resources exporters to retain earnings in state banks, and limit their conversion to rupiah? also came into effect. Business groups said that legal certainty is needed, especially on ongoing contracts, contracts with long-term duration, payments and shipping provisions. Clarity was needed on the rules for export earnings and how trade agreements are treated. A credible digital platform to monitor trade is also required. Danantara said that it would honor 'long-term contracts' but could renegotiate the price if they suspect under-invoicing. They also stated that it is developing monitoring technology. Requests for comment from representatives of Danantara and the ministries of economic affairs and finance were not immediately answered. A spokesperson for the trade ministry referred questions to economic affairs ministry. (Reporting and editing by Tomaszjanowski, Gayatri Suroyo and Bernadette Cristina)
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Dollar General's profits rise as US consumers go bargain-hunting
Dollar General raised its annual profit forecast Tuesday, mirroring Dollar Tree. Discount retailers are benefiting from consumers seeking affordable essentials in an uncertain economic climate. In premarket trading, shares of the company rose about 5%. The company also exceeded first-quarter earnings estimates. The rising gasoline prices caused by the Iran War are already straining consumer budgets. Import tariffs and AI related labor market uncertainty benefit dollar stores such as Dollar General. Todd Vasos, CEO of the company, said that "we believe our essential nature and our extensive footprint positions us well to navigate a?current macroeconomic climate." The company expects higher fuel costs to continue, despite an increase of 65 basis points in its 'gross profits, thanks to tighter inventory management and reduced shrinkage. Analysts say these are structural factors that could sustain the improvement. Dollar Tree, TJX, Ross Stores and discount apparel retailers TJX have all raised their annual forecasts. This highlights a shift towards value. Consumer Edge analyst Michael Gunther stated that "Dollar Store sales?growth is broad-based but the largest moves come from higher-income customers." Dollar General expects to earn $7.20-$7.45 per share in fiscal 2026, up from its previous forecast of $7.10-$7.35. It continues to forecast annual same-store sales growth between 2.2% and 2,7%. Placer.ai, a data firm, said Dollar General's dense and hyper-local store network allows it to capture short distance shopping trips, as consumers are watching fuel expenditure. Goodlettsville-based retailer, Tennessee, reported quarterly net sales of $10.79 billion. This was up 3.4% compared to a year ago and in line with expectations. Data compiled by LSEG showed that profit rose 12.4%, to $2 per share. This was higher than the $1.89 expected.
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Russell: Hormuz's losses can't be offset by the surge in US crude imports to Asia.
The record volume of U.S. crude oil arriving in Asia is not enough to compensate for the loss of cargoes due to the closure of the Strait of Hormuz. Asia's imports from the U.S. of crude oil were 63.56 millions barrels in May. This was the highest for a month, although at 2.05 million barrels daily (bpd), they were only slightly behind?the 2.07 million bpd that came out of June 2023. Kpler has tracked arrivals of 2,32 million bpd for June and 3,07 million bpd for July. The average import of U.S. Crude by Asia in the three-month period ending February was 1.37 million barrels per day. The United States and Israel attacked Iran in February, and Tehran responded by closing the Strait of Hormuz. This was the route through which 20% of crude oil and refined products were transported before the conflict began. Although some Middle Eastern oil exporters, such as Saudi Arabia or the United Arab Emirates, have been able to redirect some oil exports into?ports located outside the Strait of Hormuz, a minimum 10 million barrels per day (bpd) remain unavailable due to the Iran conflict. Around 1.2 million bpd of oil reached Asia through the Strait of?Hormuz in May as some vessels received Iranian approval for transit. However, this is down on the average of 13,54 million bpd during the three-month period ended in February. The volume of additional cargoes that Asia received from the United States and other exporters from the Americas, Africa and Africa is dwarfed by the scale of the losses through the Strait. Kpler data shows that Asia's seaborne oil arrivals were 19.47 million barrels per day in May, up from the 18.7 million barrels per day in April, which was at its lowest level in over 10 years. Even though May's arrivals were higher, they still fell 22% below the average of 24,82 million bpd over the three-month period ending in February. This loss of over 5 million bpd will lead to difficult choices for Asia's refining companies. They have been able to keep their plants running by using up strategic and commercial stockpiles as well as reducing the processing rate. There are questions about how long the world will be able to continue to deplete its crude oil inventories before refiners have to drastically reduce their throughput due to a shortage. When will the CRUNCH arrive? Most analysts and oil executives agree that the clock is getting louder. Some regions will be able continue to refine and produce oil at normal rates while others may struggle to get enough. If the Strait of Hormuz does not reopen in the next few weeks, and if it doesn't stay open in a sustainable manner, the price for refined fuels may have to rise to reduce demand. Asia, where 80% of fuel is transported through the Strait of Hormuz on a regular basis, will be the hardest hit. It's also likely that countries with less developed economies, such as Bangladesh, Pakistan, and the Philippines, who import fuel, will feel the effects the quickest. In the United States, there will also be more questions about the rapid depletion in inventories despite record crude and products exports. It's not hard to see that U.S. politicians of both major parties are increasingly focused on domestic issues. They believe, erroneously, that by opposing fuel and oil exports they will be able to lower retail prices in the United States. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. ROI provides data-driven, thought-provoking analysis on everything from soybeans to swap rates. The markets are changing faster than ever. ROI can help you keep up. Follow ROI on LinkedIn, X. These are the views of a columnist who writes for.
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Gold prices rise as oil prices fall, easing inflation and rate hike fears
Gold prices rose by 1% on Tuesday, boosted by lower U.S. Treasury yields. Meanwhile, oil prices fell, easing fears of rising inflation and interest rates. By 1136 GMT, spot gold had risen 1% to $4,526.7 per ounce. U.S. gold for August delivery rose 1.2% to $4,58.60. After U.S. president Donald Trump announced that talks with Iran are ongoing, oil prices dropped. Lower fuel prices reduce inflation fears and may also help to reduce bets on higher interest rates. Gold is traditionally viewed as a hedge to inflation. However, in an environment of high interest rates it loses its appeal as a non yielding asset. Ole Hansen, analyst at Saxo Bank, said that gold continues to take cues from the oil market, given the crude's influence over inflation expectations, and by extension, interest rate, bond yields, and the dollar. The metal is still in a short term downtrend. A break above $4.630 would?signal more positive outlooks and possibly attract new momentum buying." The yield on 10-year U.S. Treasury notes fell by 1.1%. This reduced the opportunity cost for holding non-yielding gold. Lebanon announced a partial truce between Hezbollah, Israel and Lebanon on Monday. This would be a de-escalation in a conflict that has claimed thousands of lives and fueled the broader U.S./Israeli war against Iran. Investors are now awaiting the U.S. Nonfarm Payrolls Report for May due on Friday to assess the resilience of the labour market in light of'mounting concerns' about inflation caused by the Middle East conflict. This week, there will be a number of Federal Reserve Board members speaking, including Cleveland Fed President Beth Hammack and San Francisco Fed president Mary?Daly. "We remain optimistic over the long term as economic growth risk, worsening geopolitical relationships, currency 'volatility, and downside risks in equity?markets, will continue to support?gold's role as a?portfolio diversifier", ANZ stated in a report. Silver spot rose by 2.1%, to $76.39 an ounce. Platinum gained 1.4%, to $1950.95, and palladium rose by 1.3%, to $1379.77.
The world stock market rallies on AI optimism, but concerns about Iran continue
The global stock market rallied Tuesday on the back of AI optimism. Oil prices also rose amid growing uncertainty about a possible agreement to end the U.S. - Iran war. U.S. president?Donald??Trump stated that talks with Iran continue. Iran has been reviewing an agreement to end their war with the U.S. but hasn't communicated with Washington in a few days.
Brent crude futures increased by nearly 1%, to about $96 per barrel.
AI ENTHUSIASM Anthropic announced on Monday that it had filed a confidential application for a U.S. Initial Public Offering, edging out rival OpenAI in a closely-watched race to reach the public markets. Alphabet, the parent company of Google, is also looking to raise $80 Billion in equity to expand its AI infrastructure.
This is a clear indication of the enormous sums required to keep up with the AI arms race. Russ Mould said that it represents a major shift from a period where there was a lot of free cash to a time when the markets were tapped to fund its expansion.
According to Labor Department data released on Tuesday, U.S. jobs openings, which are a measure for labor demand, rose more than expected, reaching the highest level since nearly two years. This came after data on Monday showed that U.S. Manufacturing had surpassed expectations and reached a 'four-year high.
Gerry Sparrow is the chief investment officer of Sparrow Capital Management. He said that "the jobs data was higher than expected. You would have thought it would have increased rates, but they did not go up."
"Employment levels are high, which is good for consumer spending." "I think the market is in good shape because of the employment data."
Wall Street's three major indexes are trading higher, after initially losing ground. The Dow Jones Industrial Average rose by 0.23%. The S&P 500 increased by 0.13%. And the Nasdaq Composite gained 0.07%.
The STOXX 600 index in Europe was up by 0.66% as the strong forecasts from STMicroelectronics boosted technology stocks.
MSCI's global stock index was up by 0.38%, after reaching a new record high. Nvidia's CEO Jensen Huang said in?Taipei that the company has enough supply to support a strong growth of central processing units and graphics processing unit (GPUs), although he acknowledged that supply constraints remain a concern.
The dollar has slipped a little bit on the currency markets. The euro fell 0.02% to $1.1628 on the day.
The Japanese yen fell 0.17% to 159.91 dollars per dollar. The pound rose 0.09%, to $1.3463.
The euro zone core inflation rate was 2.5% in May, which is higher than the 2.4% expected and the 2.1% for April. Money?markets are pricing in a quarter point rate increase by the European Central Bank this month. At least one additional hike is expected before year's end.
The yield on benchmark U.S. 10 year notes dropped 1.6 basis points, to 4.461%. The yield on benchmark German Bunds 10-years dropped 4 basis points to 2,973%.
Gold increased by 0.15%, to $4.490.16 per ounce.
(source: Reuters)