A look at the day ahead in European and global markets from
Ankur Banerjee
High-stakes earnings from Micron more than delivered by
outlining strong demand for its memory chips and that was enough
to breathe life back into an AI-fuelled rally as investors
shrugged off, for now, worries over valuations and demand.
Markets have cowered in recent days over worries that
valuations for AI-related firms have become stretched following
years of blistering gains with concerns also rising over whether
the massive spending will take too long to pay off.
Micron, the only U.S.-based manufacturer of high bandwidth
memory chips used alongside Nvidia's AI processors, helped ease
some of those concerns as its earnings showed customers had
committed $22 billion to lock in supplies of memory chips.
The firm also said it does not have a sense of when memory
supply will catch up with increasing demand. Good news then also
for Micron's South Korean rivals SK Hynix and
Samsung Electronics ( SSNLF ).
They both surged to take the KOSPI up about 5%, as
the world's best-performing stock market since the start of 2025
takes a wild ride on AI frenzy, fuelled by insatiable retail
enthusiasm.
Not only has this AI rally turned the two South Korean
chipmaking giants into stock market darlings and trillion-dollar
firms, it has also thrust their employees into the top tier of
the country's highly competitive marriage market.
Oil prices are back where they were before war broke out in
the Middle East at the end of February. That could help ease
some inflationary pressure. No one seems to have told bond
traders though, who are still pricing in at least one rate hike
from the Federal Reserve this year.
Those rate-hike bets have led the dollar to a more than
one-year high against a basket of currencies, with the yen
hovering near 40-year lows. It last fetched 161.73 per
U.S. dollar and a break beyond 161.96 would be its lowest since
1986.
The spotlight will turn to U.S. inflation data, the Personal
Consumption Expenditures price index, that could perhaps push
the yen beyond those levels and to the brink of another round of
intervention from Tokyo.
Key developments that could influence markets on Thursday:
Economic events: Germany GfK consumer sentiment for July,
France consumer confidence for June