Market Overview
US technology stocks spearheaded a robust rally on Wall Street, buoyed by strong quarterly results from SpaceX and Super Micro Computer, which rekindled investor enthusiasm for the artificial intelligence (AI) trade. Comments from Elon Musk regarding a potential merger between SpaceX and Tesla further bolstered sentiment. This positive momentum provides a key backdrop for Asian markets, with Australian shares poised to open steady. Meanwhile, concerns over French debt led its 10-year bond yield to a 20-year high, and ongoing geopolitical tensions, particularly in the Middle East, continued to exert upward pressure on oil prices.
Markets
On Wall Street, the tech-heavy Nasdaq Composite surged 1.05% to 26,702.86. The S&P 500 rose 0.58% to 7,757.17, extending a three-day winning streak, while the Dow Jones Industrial Average climbed 0.69% to 52,856.09.
In its last completed session, the S&P/ASX 200 closed at 8,831.30, up 0.16%. Australian shares are poised to open steady.
Commodity markets saw Brent Crude finish 0.64% higher at $109.49, and Gold closed up 0.20% at $4,150.80.
In currency markets, the Australian Dollar strengthened 0.71% against the US dollar to US$0.7032, while the US Dollar Index edged down 0.03% to 101.70.
The US 10-Year Treasury yield moved higher by 2.90 basis points to 5.146%.
Cryptocurrencies also advanced, with Bitcoin gaining 2.04% to $84,633.
What Drove Markets
The primary catalyst for the market’s upward movement was the re-ignition of the AI trade, sparked by impressive quarterly reports. SpaceX reported quarterly revenue of $14.6 billion, a surge of over 160% from a year ago, with a profit of $4.4 billion. Its artificial intelligence business specifically grew ninefold in the third quarter. Super Micro Computer’s strong quarterly outlook and forecast also contributed significantly to the tech rally and improved appetite for AI-linked stocks. These results, coupled with Elon Musk’s comments that special committees were exploring a potential merger between SpaceX and Tesla, while cautioning there was “no guarantee” a deal would be reached despite seeing “a lot of merit” in a tie-up, reversed recent market sentiment that had been weighed by concerns over the AI trade’s sustainability. After the US close, Meta Platforms’ earnings beat estimates with a 26% revenue jump, providing a critical gauge of the sector’s continued strength.
Joe Zidle, Cresset’s chief market strategist, noted that while “SpaceX suggests there is still a longer runway here,” the “fundamental tension or experience of getting overly enthusiastic and overly capitalizing things I don’t think has changed.” Jake Dollarhide, CEO of Longbow Asset Management, suggested that “falling interest rates and eventual lower energy prices could prove to be a nice relief for the tech and AI trade to finish out the year despite recent choppiness.”
Geopolitical undercurrents continue to shape energy markets. Ongoing tensions in the Middle East, including the conflict involving Iran-backed Houthis and the Saudi Arabia-backed government in Yemen, maintained upward pressure on oil prices. Unconfirmed reports of a Qatar and Pakistan proposal to revive talks to conclude the Iran war briefly sent oil prices down. High-level diplomatic meetings between global powers, including President Donald Trump’s stated openness to a three-way meeting with China and Russia on nuclear weapons, are being closely watched for their impact on international stability. Iranian President Masoud Pezeshkian emphasized that for any negotiation, the U.S. must first “lift the pressures, threats, and sanctions.”
Concerns over European debt re-emerged as France’s 10-year bond yield hit 5% for the first time since 2002, amid worries about political instability and the country’s economic outlook.
Stocks to Watch
Leading the tech rally, SpaceX surged 7.79%, benefiting from its strong quarterly results and merger speculation with Tesla, which itself rose 3.41%. Other key chipmakers in the AI sector also saw gains, including Nvidia (up 2.54%), Advanced Micro Devices (up 3.36%), Micron Technology (up 1.96%), and Marvell Technology (up 1.81%). The VanEck Semiconductor ETF (SMH) advanced 1.89%, reflecting the broader strength in the sector.
In contrast, Netflix was a key laggard, tumbling 5.31% after issuing disappointing Q4 revenue guidance of $13.4 billion, which missed consensus figures. The company also cut its ad revenue guidance for the full year, contributing to a year-to-date loss of 28.52%, significantly underperforming the S&P 500.