World stocks bounce as oil slides heading into US CPI print

Nov 10 : World stocks rose on Tuesday as a drop in oil prices after US President Donald Trump said he plans to hold off on new military strikes against Iran lifted sentiment ahead of US inflation data that could sway the near-term interest rate outlook.

Brent crude futures fell over 1.5 per cent, briefly dipping below the $90-a-barrel mark for the first time since late August, as investors pinned their hopes on possible peace talks between the US and Iran.

The pan-European STOXX 600 index climbed 0.9 per cent, coming within 1 per cent of its all-time high as lower oil prices helped ease some inflation concerns which have been on investors' radar since the US-Israeli war with Iran erupted at the end of February.

"The situation for Trump has changed politically with the midterms ... that probably makes it more likely that he wants to come to an accord with Iran before he's held back by Congress," said Joost van Leenders, senior investment strategist at Van Lanschot Kempen Investment Management in Amsterdam.

The stock rebound follows last week's rout in the wake of a sweeping victory by Democrats in the US midterm elections that fed concerns new regulations could dent the durability of the AI trade.

Futures tracking the S&P 500 inched 0.1 per cent higher after the cash index clocked its biggest one-day jump since April on Monday and the tech-heavy Nasdaq closed 2.7 per cent higher, its best day in over three months.

South Korea's KOSPI rose 4.4 per cent, while Japan's Nikkei gained 2.9 per cent. MSCI's broadest index of Asia-Pacific shares pushed 2 per cent higher, moving away from the seven-month low it hit last week.

Earnings reports due this week from tech companies including CoreWeave, a barometer of investor anxiety over AI, will be another test for markets as investors fret about the cost of the AI buildout and its profitability. 

The next test of the AI trade would be Anthropic's public offering, with a regulatory filing showing the IPO is set to raise as much as $64.4 billion. The landmark listing will offer the first public-market assessment of the valuations, growth prospects and risks of frontier AI companies.

NVIDIA STILL IN FOCUS      

Market focus remains on Nvidia after Trump said on Monday that the FBI was looking into CEO Jensen Huang's affair with a Chinese businesswoman alleged to be a spy for Beijing. The company had said over the weekend that its board was probing whether Huang had been the target of a foreign intelligence operation.

A separate media report on Tuesday stated that Huang's affair facilitated the shipment of at least $7.5 billion worth of the company's chips.

Nvidia shares edged 0.5 per cent higher in premarket trading after dropping 4.3 per cent on Monday. The company is also due to report earnings next week.

Meanwhile, Fed Governor Christopher Waller said the central bank ought to raise short-term borrowing costs next month even if government data shows inflation cooled last month and should consider an upsized half-point rate hike if the inflation picture worsens.

Data due at 8:30 a.m. ET (1330 GMT) is expected to show US consumer prices likely increased at a moderate pace in October, but inflation probably remained stubbornly high.

"The latest remarks from Fed officials reinforced the case for additional hikes, even as financial-market volatility and uncertainty around AI-related investment supported a deliberate approach towards further tightening," Deutsche Bank analysts said in a note.

Traders are now almost fully pricing in a 25-basis-point rate hike in December versus a 74 per cent chance seen a week earlier, the CME FedWatch tool showed after a blowout October jobs report on Friday.

The 2-year Treasury note yield, which typically moves in step with Fed interest rate expectations, rose 6.5 basis points to 4.611 per cent. The US dollar held steady against both the Japanese yen and the euro.