LONDON, June 24 Stocks staged a tentative recovery on Wednesday from a rout in technology shares on the back of caution about overstretched AI valuations, while crude oil prices fell towards four-month lows and the dollar marched up to one-year highs.
Technology stocks, which were hit hard on Tuesday, edged up ahead of earnings from chipmaker Micron, whose products help power the AI boom
But sentiment was fragile and investors opted for safer havens such as the dollar. “Price action in markets over the last seven trading days has been alarming, not just when it falls, but also when it rises,” said Michael McCarthy, market analyst at Moomoo Securities Australia. “When markets move so rapidly, in either direction, it’s a sign of instability.” Wild swings in Asian equities overnight that saw South Korea’s Kospi turn Tuesday’s 10% drop into a 3.5% gain on Wednesday did not translate into high volatility in Europe. DOLLAR ‘FEAR PREMIUM’ CITED The broader regional stock market was roughly unchanged on the day. A 15% plunge in shares of defence company Rheinmetall, after media reports of the German government planning to scrap a delayed multibillion-euro frigate project, was partly offset by gains in a scattering of heavyweight luxury and tech stocks.
U.S. stock futures were up 0.2% to 0.4%. The dollar, meanwhile, rose for a third straight day against a basket of major currencies to its highest in a year. Strategists at Scotiabank say they believe the dollar should retreat, as expectations for at least one rate hike from the Federal Reserve this year, which have lifted the currency, are overdone, especially with oil prices easing. “The dollar also continues to benefit from a sizeable ‘fear premium’ owing to lingering concerns related to geopolitics and specifically the U.S./Iran conflict,” they said.