June 25 (Reuters) -

What matters in U.S. and global markets today

By Mike Dolan, Editor-at-Large, Finance and Markets

Micron Technology's impressive earnings update and demand forecasts on Wednesday have reheated the shaky chip sector, lifting the trillion-dollar memory chip maker's stock about 14% overnight and igniting a tech rally around the world on Thursday.

With Qualcomm also revealing the extent of demand for its chips over the next couple of years, any suggestion that this week's market wobble was down to an easing of the chip frenzy appears wide of the mark.

I'll get into that and more below.

But first, check out my latest column on why peace in the Gulf is unlikely to help the Federal Reserve's inflation dilemma - and could even exacerbate it.

And listen to the latest episode of the Morning Bid daily podcast. Subscribe to hear Reuters journalists discuss the biggest news in markets and finance seven days a week.

MICRONECONOMICS

With Wall Street futures back higher after the main indexes ended in the red for a second day on Wednesday, the readout for other chip-heavy global indexes from the Micron news was immediate. South Korea's KOSPI, whose most valuable firm SK Hynix filed for a U.S. stock offering of some $29 billion on Wednesday, jumped more than 5% on Thursday.

The other big milestone of the day was the return of global crude oil prices to levels seen just before the Iran war started in late February, with Brent crude now trading at under $73 per barrel. Energy prices' completion of this dramatic four-month round trip came amid more reports of rising shipping traffic in the Strait of Hormuz since the announcement of the U.S.-Iran interim agreement.

While that, and some poor U.S. housing data, weighed on long-dated Treasury yields, it did little to defuse Federal Reserve rate-hike expectations. Two-year Treasury yields did slip but remain some 75 basis points higher than they were just before the Iran war.

That's partly because core U.S. inflation was a problem even before the war started. We'll get an update on that later today with the release of the May U.S. PCE report. It's expected to show that core annual inflation ticked higher to 3.4% last month.

The Fed's wariness is also partly connected to expectations that the AI spending surge, soaring stocks and rising chip prices could be amplifying inflation more broadly, an issue that could - perhaps ironically - be worsened if the fuel price retreat takes the brakes off economic activity and spending elsewhere in the economy.

Chart of the day

Micron forecast quarterly profit and revenue well above expectations and said its customers had committed $22 billion to lock in supplies of memory chips, sending its shares surging in after-hours trading.

Micron's stock, which now values the company at up to $1.3 trillion, has nearly quadrupled this year, and most of that rise has happened since April even as the Iran war and energy shock was unfolding.

Today's events to watch

-- U.S. May PCE inflation data (8:30 a.m. EDT), May durable goods (8:30 a.m. EDT), weekly jobless claims (8:30 a.m. EDT)

-- U.S. 7-year note auction (1 p.m. EDT)

-- Fed's Michelle Bowman, New York Fed's John Williams and Chicago Fed's Austan Goolsbee all speak

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