Stock Markets Rise as Oil Prices Retreat and AI Investment Surges

Global stock markets rose on Tuesday as oil prices eased, easing concerns about rising government borrowing costs. European markets gained around half a percent in midday trading, following gains of one percent in Tokyo and Hong Kong. On Wall Street, the Nasdaq index hit a record high on Monday, driven by strong performance in artificial intelligence-related stocks.

Oil futures dropped about 2.5 percent, with Brent crude falling below the $100 per barrel mark. Dan Coatsworth, head of markets at AJ Bell, noted that this retreat provided relief to interest-rate-sensitive stocks, including real estate and consumer cyclicals. Meanwhile, exports from the Gulf region, excluding Iran, reached 81 percent of pre-war levels, with crude exports back to 91 percent but refined product exports lagging at around 60 percent.

In the UK, diesel prices hit a record high, adding to economic pressures. Traders remain uncertain about the Middle East crisis, which is pushing central banks to raise interest rates to combat energy inflation. This has driven up government bond yields to levels not seen in decades, raising worries about rising debt.

Analysts highlighted that the rapid expansion of AI data centers, servers, and chips has intensified the problem, with tech giants like Google, Amazon, and Microsoft borrowing heavily. Borrowing by these firms hit around $500 billion in the nine months since January, with Goldman Sachs expecting this to rise to $1.2 trillion by 2027. Chris Della Fave, senior vice president at Post Oak Group, estimated that AI accounts for 25 percent of all corporate bond issuance, up from four percent two years ago.

In company news, UK online fashion retailer Asos saw its share price drop more than 10 percent after customers reported receiving a notification claiming its systems had been hacked.