As Microsoft’s Results Allay Concerns about AI, Stocks Rise – Europe Market Wrap
US stocks rose after strong results from Microsoft reassured investors that massive AI investments are beginning to deliver returns, offsetting renewed concerns over inflation that continued to pressure long-dated government bonds. S&P 500 futures gained 0.5%, while Nasdaq 100 futures climbed 1.1% after the index entered a technical correction.
Microsoft jumped 9.3% after reporting its fastest cloud-computing growth in four years while keeping spending under control, boosting confidence in the AI trade. Chipmakers also rebounded after Samsung reported a 250-fold surge in semiconductor profits and warned that memory shortages are likely to worsen.
Long-dated Treasury yields continued to climb, with the US 30-year yield rising 3 bps to its highest level since 2007 as investors remained concerned about persistent inflation. The Dollar extended its decline for a fifth consecutive session, while Brent crude traded around $90 a barrel as markets monitored renewed conflict between the US and Iran.
In the UK, the BoE left interest rates unchanged at 3.75%, although three of the nine policymakers voted in favour of a 25 bps rate hike. Markets remain almost evenly split over whether the central bank will tighten policy at its September meeting.
The divergence between Microsoft’s strong results and Meta’s weaker outlook has reinforced investor focus on whether AI spending is generating sufficient returns. Markets will continue watching earnings from the largest technology companies for further evidence that heavy investment in AI can sustain future profit growth.
