Risk sentiment is wavering as investors navigate the escalating costs of the Middle East conflict. Initially buoyed by President Trump’s comments suggesting no immediate US strikes on Iran, Brent crude oil prices have rebounded above $110.40, reflecting ongoing geopolitical tensions. European stocks opened higher, led by firms like IG Group and Diageo, but the fragility of the market remains evident as bond yields rise, supporting a stronger dollar and pressuring GBP and EUR.

The UK labor market’s recent softness—with unemployment rising to 5%—adds further uncertainty, potentially capping upside for Gilts, which are already underperforming in the G10. Meanwhile, tech companies are grappling with the implications of AI-related layoffs, with firms like Standard Chartered announcing significant job cuts. However, these moves have not translated into stock price gains, raising questions about the sustainability of cost-saving measures in the tech sector.

For market professionals, the key takeaway is the potential risk posed by prolonged geopolitical tensions on supply chains crucial for semiconductor production, which could dampen future AI investments and impact stock performance. All eyes will be on Nvidia’s upcoming earnings report, as its outlook could significantly influence tech stock trajectories.

StoxFeed tracks this as a market signal: AI and semiconductor stocks are driving tech sector gains

Source: xtb.com