Micron Rally Revives Nasdaq AI Optimism as Dollar Strengthens

Summary

Micron lifted sentiment across AI-related stocks after strong demand for memory chips eased concerns over the sector, supporting expectations for the Nasdaq. The US dollar remained near a one-year high as markets continued to price in at least one further Federal Reserve rate increase this year, while the yen hovered near multi-decade lows. Oil prices returned to levels seen before the Middle East conflict, helping to ease recent inflation pressures.

Equities

The FTSE 100 closed 0.3% higher on Wednesday, while the FTSE 250 gained 0.8%, ending a four-day losing streak. Property stocks led the market after warehouse developer Segro rejected a $16.6 billion takeover approach from US logistics group Prologis, lifting sentiment across the real estate sector.

Segro shares closed 17.4% higher on Wednesday after rejecting the unsolicited bid, with Prologis urging shareholders to encourage the board to enter discussions. The wider FTSE 350 real estate investment trust index climbed 6.9%, while the broader real estate sector rose 6.3%.

Liontrust shares finished 12.6% higher on Wednesday after the fund manager said quarterly net outflows had slowed as international expansion and stronger institutional demand supported inflows. Primary Health Properties added 4.5% after confirming advanced discussions over a joint venture involving its private hospital assets. Mining and energy shares moved lower as commodity prices weakened, with industrial metal miners falling 2.1%, precious metal miners down 4.3% and the energy sector losing 2.5%.

In the US, the Dow Jones Industrial Average rose 0.35% on Wednesday, while the S&P 500 slipped 0.1% and the Nasdaq Composite fell 0.43% as technology stocks came under pressure. Lower oil prices supported airline and travel shares, helping offset weakness across the technology sector.

Micron Technology closed 0.3% lower ahead of its earnings announcement but jumped in after-hours trading after reporting quarterly revenue above expectations and issuing stronger-than-expected guidance for the fourth quarter. Cerebras Systems fell 19.6% on Wednesday after warning that full-year profit margins would decline from first-quarter levels, with investors also reacting to OpenAI unveiling its own inference chip.

Homebuilder shares rallied after President Donald Trump cancelled plans to sign proposed affordable housing legislation. Hovnanian Enterprises surged 11.3%, PulteGroup climbed 7.2% and Toll Brothers gained 6.7% by the close.

Hertz shares tumbled 40.7% on Wednesday after the car rental company warned that second-quarter adjusted earnings would likely come in near the bottom of its forecast range and announced plans to raise $100 million through a share offering. Expedia Group and Booking Holdings both moved higher as lower fuel prices boosted optimism across the travel sector.

Forex & Commodities

The US dollar remained close to a 13-month high on Thursday as investors continued to price in the possibility of further Federal Reserve interest rate rises this year. The dollar index traded around 101.5 after reaching 101.8 on Wednesday, while the euro traded near $1.137 after the dollar strengthened beyond the $1.140 level earlier in the week.

Sterling also remained under pressure. The dollar reached $1.314 against the pound on Wednesday, its strongest level in seven months, before holding close to that level on Thursday. Against the yen, the dollar traded at 161.7, leaving the Japanese currency close to levels where authorities are expected to consider intervention.

Expectations for US monetary policy have shifted significantly in recent weeks. Markets that had previously anticipated Federal Reserve rate cuts are now pricing in the possibility of another rate rise later this year. The move has pushed two-year US Treasury yields to 4.150 since the beginning of May, widening the gap with German government bond yields and providing further support for the dollar.

Spot gold traded at $3,993 per ounce on Thursday after falling below $4,000 on Wednesday for the first time since November 2025. The precious metal remained under pressure as higher US interest rate expectations and the stronger dollar reduced demand. Silver traded at $57.37 per ounce, while platinum stood at $1,566, both close to their lowest levels since November 2025.

Oil prices extended Wednesday's sharp decline, with Brent crude trading at $72.52 per barrel and US West Texas Intermediate at $69.32. Both benchmarks fell to their lowest levels since 27 February as expectations of increased Middle Eastern oil supplies outweighed concerns over tightening US crude inventories.