Chipmakers fuel global stock gains as oil retreats

By Karen Brettell

NEW YORK, Sept 21 (Reuters) - Global stocks rose on Monday as fresh evidence of booming AI demand lifted tech shares, while oil fell on reports that more supply was leaving the Gulf than previously thought, despite the ongoing conflict.

The bond market, which endured a sixth straight weekly selloff last week amid rising interest rates and stubbornly high oil prices, rallied, with European debt leading the gains.

MSCI's All-World index rose 1.03%, while shares in Europe rallied 1.12%.

The Nasdaq Composite rose 1.62% while the S&P 500 gained 1.05% and the Dow Jones Industrial Average was up 0.49%. 

Among chip companies, Intel rose 13%, Advanced Micro Devices surged 9.2% to become the latest chipmaker to reach $1 trillion in market valuation and Micron was up 2.3%.

South Korean data showed exports for the first 20 days of this month hit a record high, thanks to surging demand for chips.

Risk appetite remains strong despite growing expectations of further global rate hikes.

“While synchronized rate hikes have raised concerns about risk assets, equities remain near record-highs, supported by strong earnings growth,” said Seema Shah, chief global strategist at Principal Asset Management.

“Importantly, central banks are raising rates to address inflation rather than to slow economic activity, suggesting tightening will be gradual and limited. While higher rates may hinder further multiple expansion, they are unlikely to materially pressure earnings or derail the broader bull market,” Shah said.

BONDS STABILISE

Interest-rate-sensitive two-year US Treasury yields were last down 1.18 basis points at 4.731%, after earlier reaching 4.772%, the highest since July 2024. Benchmark 10-year yields fell 3.68 basis points to 4.959%. 

Central banks in most major economies are expected to raise rates again this year. Hawkish guidance from the Federal Reserve last week has futures wagering on a 53% chance it will hike rates again in October, with 89% odds of a hike by year-end.

Concern about the impact of inflation, as well as over governments' long-term finances, hit French debt on Friday, sending its risk premium to the highest since the 2012 euro zone debt crisis.

In Germany, Chancellor Friedrich Merz's mainstream conservative party suffered its worst election results since 1949. But the driving force for bonds remained the drop in oil, leaving German 10-year yields down 7.08 basis points at 3.451% and French 10-year yields 10 bps lower at 4.465%.

OIL RETREATS, FOR NOW

Oil futures prices eased even as Iran and the United States exchanged new threats and after the Houthis attacked Saudi Arabia's capital.

US crude fell 4.8% to $95.49 a barrel and Brent fell to $100.17 per barrel, down 3.56% on the day.

“Profit-taking after recent gains, together with hopes for constructive discussions at this week's UN General Assembly (UNGA) and the upcoming Trump-Xi meeting, helped improve market sentiment,” said ING commodities strategists Ewa Manthey and Warren Patterson in a note.

US President Donald Trump will attend the United Nations General Assembly this week, ahead of a meeting with Chinese President Xi Jinping on Thursday.

There were also reports that Saudi producers were aiming to quickly restart some flows through the country's main east-to-west pipeline after it was damaged in attacks last week, though details were lacking and analysts harboured doubts.

Data from analytics firm Kpler showed exports from Saudi Arabia had recovered to just over 4 million barrels per day so far in September after slumping to 2.4 million bpd in August, the lowest since at least 2013. [O/R]

In foreign exchange, the dollar gained 0.36% against the yen to 157.43, with investors wary in case the Bank of Japan took advantage of the lack of liquidity during the country's three-day Silver Week holiday to step in to buy the currency.

The yen jumped on Friday after Japanese authorities conducted rate checks in the currency market, the Nikkei newspaper reported.

(Reporting by Karen Brettell and Amanda Cooper; Editing by Jamie Freed, Andrew Heavens and Nia Williams)