Global stocks edged toward a weekly gain on Friday as earnings from major U.S. technology firms helped calm worries about the pace of artificial‑intelligence investments, while the Japanese yen slipped after the Bank of Japan left rates unchanged.
Tech earnings lift market sentiment
Microsoft’s earnings report on Wednesday eased investor anxiety by projecting steady cash generation through fiscal 2027, a forecast that suggested its AI‑related spending could be sustainable. A day later, Amazon announced its strongest cloud growth in more than four years, reinforcing the view that the billions poured into AI infrastructure are beginning to yield results.
“Investors are increasingly focused on capital efficiency, financing and the long‑term economics of hyperscalers’ AI spending rather than on near‑term demand,” said Saverio Papagno, portfolio manager of the North Square Growth Opportunities ETF. He added that, despite concerns about competition from China and debt levels, the current pullback might present a buying opportunity for long‑term holders.
Futures linked to the Nasdaq 100 rose 0.83%, while the S&P 500 and Dow Jones futures gained 0.35% and 0.46% respectively, indicating that the positive earnings backdrop was extending beyond the tech sector.
Asian markets rebound amid mixed signals
South Korea’s Kospi, which had suffered steep losses earlier in the week, surged 17.91%, marking a record‑setting recovery. The index remains roughly 30% below its all‑time high, showing how sensitive the market has become to shifts in AI‑related sentiment.
The Japanese yen continued its decline against the dollar, reaching ¥160.38 after a brief rebound following a yen‑buying, dollar‑selling intervention by Tokyo on Thursday. Edward Acton, rates strategist at GMO, warned that “intervention can’t be significantly potent in reversing the trend in yen weakness” without accompanying domestic asset reinvestment and a quicker pace of rate hikes.
Related: Limited Supply Drives Demand for Landed Homes
The Bank of Japan maintained its policy rate on Friday but signaled readiness to raise borrowing costs if inflation pressures persist. Governor Kazuo Ueda noted that inflation risks were skewed to the upside and that the central bank stood ready to accelerate hikes should monetary conditions warrant it.
European indices and broader risks
In Europe, the STOXX 600 index reached a fresh all‑time high and appears set for its fourth straight month of gains. The MSCI All Country World Price index climbed 0.87%, poised to break a two‑week losing streak, though it still faces a modest monthly decline if current levels hold.
Geopolitical tensions in the Middle East continue to loom over global equities. Recent strikes have dampened hopes for a swift resolution, and the disruption of oil shipments through the Strait of Hormuz, along with attacks on the Bab el‑Mandeb route, adds further uncertainty. Brent crude is on track for its first monthly gain since March, reflecting tighter supply.
Yield movements suggest mixed expectations for U.S. monetary policy. The 30‑year Treasury yield slipped 2.32 basis points but remains near 19‑year highs, while short‑end yields fell, steepening the curve as doubts linger about the Federal Reserve’s ability to anchor inflation expectations. The Fed’s decision to keep rates steady earlier this week left markets searching for clearer guidance.
Future direction will likely hinge on whether the AI spending narrative can sustain investor confidence.
