Tech stocks lift world shares as CoreWeave revives AI trade

Technology stocks lifted world shares on Wednesday. Investors looked past rising expectations of further Federal Reserve tightening. They focused on renewed optimism about artificial intelligence (AI) after strong results from cloud computing firm CoreWeave.

The pan-European STOXX 600 rose 0.3% by 1213 GMT, nearing its August record high. Investors piled back into AI-linked stocks. This echoed a technology-driven rally in Asia after last week's sector rout.

Nasdaq futures jumped 2%, and S&P 500 futures rose 0.9%. CoreWeave said it expected to become profitable in 2028. This eased immediate concerns that demand may not be strong enough to support the company's debt-fuelled expansion.

CoreWeave shares rose 16% in US premarket trading. They were rebounding from an 18-month low hit last week. That low came after a Democratic sweep in US midterm elections triggered a sharp sell-off in AI-related stocks. Investors were worried that infrastructure investment could slow.

"The results confirm that demand for AI is still very strong," said Alberto Conca, CIO at Swiss wealth manager LFG+ZEST. "However, CoreWeave still faces significant questions over the sustainability of its debt burden."

MSCI's broadest index of Asia-Pacific shares jumped 1.5% for a third straight day of gains. The gains were helped by a 2.6% rise in South Korea and a 3.6% increase in Taiwan. Japan's Nikkei climbed 1.3%.

Conca said the equity rally was broadening beyond the AI-linked stocks that had led markets in recent years. Value sectors and Europe were attracting new interest. He also said earnings growth remained robust enough to support equities, despite pressure on valuations across parts of the AI sector.

Investors were also watching Anthropic. The company is pressing ahead with its listing at a $1.4 trillion valuation. That sets up a key test of Wall Street's faith in the AI boom.

Nvidia shares rose in premarket trading. They followed two days of steep losses that erased about $430 billion. The losses came after reports that its CEO Jensen Huang may have been the target of a foreign intelligence operation. The operation was linked to an alleged Chinese spy.

Beijing called the accusations "groundless". Nvidia has said its board has no reason to believe US national security or company secrets were compromised. It also said Huang has committed to cooperating with the internal review.

Data on Tuesday showed core US inflation ran at a monthly rate of 0.3% in October. That was higher than the forecast 0.2%. Before the data came out, Fed Governor Christopher Waller said a core reading of 0.3% would prompt him to consider a 50-basis-point rate hike at the next meeting in December.

Dallas Fed President Lorie Logan said two more rate rises were needed. Chicago Fed President Austan Goolsbee warned of a "real inflation issue" on hand. Philadelphia Fed President Anna Paulson called for gradual rate hikes.

The wave of hawkish comments hit Wall Street on Tuesday. It sent Fed funds futures tumbling. A quarter-point rate hike in December is now essentially locked in. Markets are pricing a 10% chance of a bigger 50 basis-point rise.

"The risk from where we are is that inflation expectations become entrenched and what was going to be a mild hiking cycle is becoming more and more hawkish," said Justin Onuekwusi, CEO of investments at St. James's Place. "That is a risk."

US Treasury markets were closed for the Veterans Day holiday. This came after a sharp sell-off on Tuesday, when 2-year yields jumped 18 basis points.

Asian bonds were under pressure, pushing Japan's 10-year government bond yield up 10 basis points to 2.793%. Euro zone debt markets stabilised, while Germany's benchmark 10-year yield was broadly unchanged at around 3.3%.

The repricing of interest rate expectations lifted the dollar further. The dollar index, which measures its performance against other major currencies, hit a four-week high of around 102.5. It was up 0.3% on the day.

The risk-sensitive Australian dollar steadied after a nearly 0.9% slide on Tuesday. Traders had bet the Reserve Bank of Australia would begin cutting rates in 2027, after five rate hikes this year.

Gold bounced 0.4% to $4,047 an ounce. This recovered some ground after a 2.6% slide in the previous session. A stronger US dollar and hawkish Fed remarks had weighed on the precious metal.

Oil prices also rebounded from two-month lows after Tehran said it would not allow even a single particle of enriched nuclear material to leave the country. This reduced hopes of an imminent de-escalation in the Iran war. Brent crude rose 1.4% to $92.8 a barrel.