Technology stocks led a rally in US equities on Tuesday, and the momentum carried into Asian trading this morning. Investors are now positioning ahead of third quarter results from Alphabet, Microsoft and Amazon, as well as the Federal Reserve’s latest policy decision. Beneath the improved mood in equities, however, rising bond yields, firmer oil prices and persistent inflation pressures continue to complicate the outlook.
Global equity markets at a glance
US and continental European equities advanced and the rebound extended into Asia, although the FTSE 100 fell.
US markets close higher on AI optimism
The Nasdaq Composite climbed 1.18% to close at 26,477.81, outpacing the S&P 500, which added 0.60% to 7,722.60. The Dow Jones Industrial Average finished almost flat, up 0.03% at 52,377.57.
Fresh AI investment news from Meta, SpaceX and Broadcom, together with Anthropic’s filing for an initial public offering, helped calm doubts over whether the current wave of AI spending can be sustained. A pullback in oil prices, supported by new diplomatic moves aimed at reducing tensions in the Middle East, offered further support, even though crude remained at elevated levels.
European equities extend gains while London lags
European stocks rose for a second day running. The Stoxx 600 advanced 0.5% and the Euro Stoxx 50 gained 0.8%, with mining and technology names at the front of the move. The FTSE 100 bucked the trend, falling 0.7% after HSBC and Reckitt both disappointed with their results and outlooks.
Asian markets build on the rebound
The positive tone carried into Asia this morning. South Korea’s KOSPI jumped 6.4%, powered by strong earnings from SK Hynix and renewed appetite for AI-linked chipmakers. Japan’s Nikkei 225 added 1.5%, and in mainland China both the Shanghai Composite and the CSI 300 rose by roughly 0.7%. Hong Kong’s Hang Seng was up 0.3%, helped by technology stocks.
Bond yields, the dollar and oil temper the rally
Not every signal was supportive. The yield on the US 10-year Treasury rose above 5% ahead of the Fed meeting, a sign that investors remain uneasy about inflation and about where interest rates go from here. The US dollar stayed close to a two-week high.
Oil prices also reversed Tuesday’s losses. Brent crude rose 1.5% to $115.60 a barrel, while WTI added 1.2% to $101.13, following fresh Houthi attacks on Saudi energy facilities and concerns over possible disruption to shipping routes in the region. Taken together, these moves show that the improvement in equity sentiment sits alongside unresolved risks from inflation, elevated bond yields and geopolitics.
Corporate developments
AI infrastructure continues to dominate the corporate news flow, with semiconductors, computing capacity, memory and optical networking all pointing to sustained demand. Results outside technology painted a more uneven picture.
SK Hynix posts record quarter on AI memory demand
SK Hynix reported third-quarter operating profit of KRW 83.33 trillion, an increase of 632% compared with the same period last year. Revenue grew 328% to a record KRW 104.6 trillion. The company expects shortages of AI-driven memory to last until 2030 and has secured long-term agreements for more than half of its production capacity in 2027 and 2028.
The numbers confirm strong demand for high-performance memory, although the extent to which current growth expectations are reflected in valuations remains important.
AI equipment demand remains strong
ASM International guided fourth-quarter revenue to €1.23 billion, above the consensus estimate of €1.18 billion. The company also expects 2027 revenue to exceed €5.7 billion, reaching its 2030 sales target three years ahead of schedule.
Analysts separately pointed to strong data-centre demand as a major growth driver for AMD, although supply-chain capacity remains a potential constraint. Taken together, these developments suggest that demand for AI equipment remains strong, but investors will increasingly look for evidence that this investment converts into lasting earnings and cash flow.
Oracle and OpenAI broaden their chip supply
Oracle is scaling up its Nvidia-based AI server deployments to multi-gigawatt capacity and is also diversifying its suppliers by adding Google’s tensor processing units and chips from Cerebras and SambaNova. Capital expenditure planned for fiscal 2027 remains high at between $90 billion and $95 billion.
OpenAI is reportedly weighing the use of Google’s TPUs to extend its computing capacity beyond Nvidia, alongside its ongoing work with Broadcom on its own chips. These plans illustrate both the sheer scale of infrastructure spending and the growing role of alternative suppliers. They also raise questions about how this spending will be financed, how capital intensive it will become and what returns it will ultimately deliver.
Optical networking and data storage gain attention
Interest in optical networking stocks has picked up on the prospect of US restrictions on imports of Chinese optical transceivers from 2027, tight supply of advanced components and expectations that AI investment will continue. Lumentum, Ciena, Coherent and Nokia have been named among the companies that could benefit as optical connections become more central to AI infrastructure.
Seagate delivered a strong quarter of its own. Revenue rose 61% to $4.2 billion, adjusted earnings came in at $7.68 per share and free cash flow reached a record $1.5 billion. Guidance for second-quarter revenue of $4.8 billion was ahead of expectations, yet the shares fell 5.6% in after-hours trading, a reminder that strong numbers do not always translate into an immediate share price gain.
Mixed results beyond technology
Outside the technology sector, results were uneven. Visa grew fourth-quarter revenue by 13% to $12.1 billion, with payments volume up 9% and cross-border volume up 14%, pointing to steady consumer spending. PayPal lifted its full-year adjusted earnings guidance after a better-than-expected quarter, and Coca-Cola also beat forecasts and raised its outlook.
On the other side, Robinhood fell short of earnings expectations as revenue from cryptocurrency transactions dropped sharply. Boeing continued to contend with production constraints and significant net debt, and Mercedes-Benz cut its profit outlook amid tough conditions in China and rising costs. The divergence underlines how much earnings quality, guidance and balance-sheet strength matter in a market that is becoming more selective.
What this means for investors
Real demand for memory, computing and networking infrastructure continues to underpin the AI theme. At the same time, markets are paying closer attention to what it costs to fund this expansion and what it will eventually earn. Solid earnings could keep the current recovery going, but high valuations and heavy capital commitments leave the sector exposed if results disappoint. Beyond technology, earnings revisions and cost pressures remain important differentiators.
Today’s economic calendar and earnings
The Federal Reserve’s decision is the main event today, with fresh inflation data, the Bank of Canada decision and major technology earnings also in focus.
Federal Reserve decision in focus
The Fed’s interest rate announcement and the press conference that follows are the main events of the day. Markets broadly expect rates to stay at 3.75% to 4.00%, which puts the emphasis on the central bank’s guidance. Investors will be looking for signals on the timing of the next move, particularly with inflation concerns persisting and expectations of a possible rate increase in December. The move in the US 10-year yield above 5% highlights how sensitive markets are to the outlook for inflation, government borrowing and monetary policy.
Australian inflation and the Bank of Canada
Inflation data from Australia added to these concerns. Consumer prices increased 1.3% in the third quarter compared with the previous quarter, up from 0.6% in the second quarter. Annual CPI inflation rose to 3.9%, and the annual trimmed mean measure edged up to 3.7% from 3.6%. Headline inflation for September reached 4.3%, compared with 4.0% in August.
The data point to stubborn underlying price pressures that could make it harder for central banks around the world to ease policy. The Bank of Canada also announces its rate decision today, with a cut to 2.25% expected.
US data and corporate results
In the US, trade balance and inventory figures, including weekly oil inventories, will offer further insight into economic momentum and conditions in energy markets. Events in the Middle East remain relevant to the inflation outlook, especially if oil prices stay high or disruption to shipping worsens.
Earnings from Microsoft, Alphabet and other large technology companies are set to be the main driver of market direction, with GE Vernova, KLA and Amphenol also reporting. Investors will look beyond headline earnings to AI demand, capital spending plans, margins and signs of monetisation. Together, the technology results and the Fed’s guidance are likely to decide whether the recent rally in equities can continue or whether worries over valuations, inflation and funding costs return to the fore.
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