AI Craze and Geopolitical Detente Resonate, US Semiconductors Lead Gains, Oil Prices Plunge

On Wednesday, the three major U.S. stock indices edged higher at the start of trading, with the Nasdaq up about 0.1%, the Dow Jones up 0.2%, and the S&P 500 up 0.1%. The semiconductor sector performed particularly well, with TSMC and Advanced Micro Devices both gaining about 3%, and Micron increasing by 5%. Oil stocks were under pressure across the board, with Western Oil, British Petroleum, and Total all down by about 3%.

Goldman Sachs' strategic team raised their U.S. stock target for the day, predicting that the S&P 500 index will reach 8,000 points within the year, up from the previous target of 7,600 points. Team leader Ben Snyder said that profitability driven by the AI boom will continue to push up the stock market. Vantage Global Prime analyst Hebe Chen summarized the current situation as "the fading of the war premium and the accumulation of the AI premium," believing that this opens up a broader space for this round of gains.

On the geopolitical front, there has been a marginal easing in U.S.-Iran relations. According to CCTV news, a preliminary informal document involving a framework for a U.S.-Iran Memorandum of Understanding was disclosed, covering arrangements for Hormuz Strait passage, regional military deployments, and the framework for future agreements. According to the document, the U.S. has promised to lift the maritime blockade on Iran and withdraw some military forces from the surrounding area, while Iran has promised to gradually resume commercial ship traffic in the Hormuz Strait within a month. Trump also stated that negotiations between the U.S. and Iran to extend the ceasefire and reopen the strait are progressing.

The news pushed Brent crude down by 3% to $93.74 per barrel. However, the market still has differences over the direction of the situation, with Ian Lyngen of BMO Capital Markets stating that negotiations between Washington and Tehran have experienced multiple setbacks before, and will remain cautious until more tangible progress is seen. The U.S. Central Command still launched strikes on missile positions in southern Iran on Tuesday, and boundary testing under the ceasefire framework has not stopped.

Safe-haven assets fell in tandem, with spot gold down 1% to $4461.2 per ounce and spot silver down 3.5% to $74.15 per ounce. U.S. Treasury yields widened their decline, with the 30-year yield falling by 3 basis points to 4.99%. The dollar overall weakened against the G10 currencies, with the yen under pressure near 159, as the market continues to watch the risk of Japanese authorities intervening in the foreign exchange market. Stephen Jen of Eurizon SLJ Capital believes that the yen is expected to gradually strengthen, posing a potential threat to trading strategies that depend on yen depreciation. The New Zealand dollar led the gains among G10 currencies, after the Reserve Bank of New Zealand signaled a possible further rate hike.

In terms of individual stocks, Tesla gained about 2%, following reports that Musk had discussed merging SpaceX with Tesla with colleagues. Pinduoduo fell about 9%, with first-quarter revenue and adjusted earnings per ADS both missing expectations. Bitcoin fell slightly by 0.6%, trading at $75,560.