Alphabet in focus as AI rally lifts global chip stocks

Alphabet is in focus ahead of its results as AI-driven demand boosted chipmakers across Asia and revived technology sentiment. Wall Street ended lower overnight, while S&P 500 futures edged down before major US technology earnings. The US dollar remained firm near a multi-decade high against the yen despite renewed Japanese intervention warnings, while Brent crude climbed after fresh disruption risks to Middle East shipping routes.

Equities

The FTSE 100 closed 0.58% higher on Tuesday, while the FTSE 250 gained 0.90%, as banking, energy and mining shares supported the UK market. Investors also assessed the latest UK labour market data, which showed unemployment and wage growth remained steady through May, reinforcing expectations that the Bank of England is unlikely to change interest rates immediately.

BP and Shell both closed more than 1% higher on Tuesday as oil prices climbed to five-week highs following renewed concerns over Middle East supply disruptions. Gold producers also performed well, helping precious metals miners rise 4.2% after bullion prices strengthened. Mitie Group surged 38.8% after agreeing to a £3.1 billion takeover by OCS Group International, while IQE climbed 30.4% after the semiconductor wafer manufacturer raised its full-year revenue growth forecast. Compass Group finished 1.6% lower despite reporting 7.1% organic revenue growth during the third quarter.

Defence shares also advanced after Prime Minister Andy Burnham appointed former defence secretary John Healey as finance minister. Babcock International rose 4.1%, QinetiQ gained 3.1% and BAE Systems added 1.8%.

On Wall Street, the Dow Jones Industrial Average closed 0.74% higher on Tuesday, while the S&P 500 rose 0.89% and the Nasdaq climbed 1.29%. Semiconductor stocks led the recovery as investors looked ahead to earnings from major technology companies including Alphabet, Intel and Texas Instruments.

Micron Technology jumped 12.2%, Western Digital gained 12.5% and Sandisk surged 14.3% as chipmakers rebounded after last week's sharp sell-off. 3M closed 7.3% higher after raising its full-year profit forecast, while Hasbro climbed 8.8% after increasing its annual sales and earnings guidance on continued demand for its digital gaming business and the Magic: The Gathering franchise.

Danaher fell 11% after cutting its annual core revenue growth outlook and reporting weaker biotechnology sales. MSCI dropped 10% after increasing its full-year operating expense forecast despite stronger quarterly revenue, while Genuine Parts lost 2.7% after lowering its full-year profit outlook.

Forex & Commodities

The US dollar strengthened early on Wednesday, supported by higher US Treasury yields and continuing tensions in the Middle East. The euro slipped to around $1.141, while sterling weakened to $1.339 after falling below its 200-day moving average as investors assessed the UK government's fiscal plans. The Japanese yen remained under heavy pressure, with the US dollar trading above ¥163, close to its weakest level since 1986, keeping markets alert for possible intervention by Japanese authorities. The Australian dollar fell below $0.7000, while the New Zealand dollar traded around $0.5825.

Spot gold climbed to a two-week high early on Wednesday, rising to $4,129 per ounce as investors returned to the precious metal following last week's decline. Attention remained focused on developments in the Middle East and the US interest rate outlook. Silver also advanced to $59.71 per ounce, while platinum reached $1,660 and palladium rose to $1,311.

Oil prices extended their recent gains early on Wednesday as supply concerns intensified. Brent crude traded at $92.01 per barrel after reaching a six-week high of $92.67 earlier in the session, while West Texas Intermediate crude rose to $85.16 per barrel. The latest increase followed further US military strikes on Iranian targets, continued attacks involving Iran-backed Houthi forces in the Red Sea, and reports that several Saudi oil tankers had altered their routes because of security concerns. Separately, the Caspian Pipeline Consortium suspended oil loadings following attacks near its Black Sea terminal, raising concerns over Kazakh oil exports.