World shares hover near record highs on simmering geopolitics, AI optimism
By Sophie Kiderlin and Rae Wee
LONDON, Jan 16 (Reuters) – Global stocks hovered near record peaks on Friday as international tensions simmered, and the dollar held near a six-week high as traders trimmed bets on Federal Reserve interest rate cuts.
Safe-haven gold was little changed, while oil prices rebounded from an earlier retreat after U.S. President Donald Trump adopted a wait-and-see attitude towards Iran, having earlier threatened intervention.
International politics has been the major focus for markets since the start of the year following Trump’s action in Venezuela, threats to take over Greenland and tensions in the Middle East.
“Although it appears that we’ve sort of dialled down the probability of U.S. intervention in the Middle East for the time being, I don’t think we can entirely rule that out,” Michael Brown, senior research strategist at Pepperstone, said.
US PUBLIC HOLIDAY CURBS MARKET ACTIVITY
Market participants may lack conviction ahead of the Martin Luther King Jr. Day U.S. holiday on Monday, Brown said.
“I wouldn’t be entirely confident if I was running a book to be long-risk or short-crude into a three-day weekend with this amount of Middle East tension going on,” he said.
The pan-European Stoxx 600 index was 0.1% lower, after notching a record high on Thursday. The index was on track to end the fifth consecutive week in positive territory, bringing gains made at the end of 2025 into the new year.
France’s CAC 40 was 0.7% lower, underperforming regional peers on political uncertainty.
The French government on Friday postponed talks about its 2026 budget as lawmakers failed to reach a compromise.
U.S. stock futures pointed to a firm start on Wall Street, where an earnings-packed week will end with State Street results.
In Asia, tech-heavy indexes in Taiwan <.TWII> and South Korea <.KS11> notched all-time peaks as stellar results from Taiwanese chipmaker TSMC <2330.TW> revived the AI trade.
The U.S. and Taiwan clinched a trade deal on Thursday that cuts tariffs on many of the semiconductor powerhouse’s exports, directs investments towards the U.S. technology industry and risks infuriating China.
“I guess with the TSMC report yesterday being pretty solid and sounding optimistic, it certainly provided a much-needed shot in the arm for those AI names which have been struggling on Wall Street in recent months,” Tony Sycamore, a market analyst at IG, said.
In the U.S., premarket trading showed that semiconductor shares were on track to extend their AI-fueled rally, as the likes of Intel and Nvidia edged up.
