GLOBAL MARKETS-Stocks climb as strong tech results reignite AI trade, yen swings

The Middle East conflict remains a major overhang for global equities. Fresh strikes in the region have dashed hopes of an imminent resolution, and diplomatic efforts to end the war have proceeded in fits and starts. Oil prices rose sharply in July, with Brent crude LCOc1 headed for monthly gains for the first time since March. O/R "The shock absorbers in oil markets are dwindling fast, so a failure to de-escalate would be materially costlier than previous rounds of tension," wrote Teddy Bunzel, head of Lazard Geopolitical Advisory at Lazard Asset Management. Shipments through the crucial Strait of Hormuz remain disrupted. The alternative route through the Bab el-Mandeb Strait has also come under attack from the Iranian-backed Houthis, further worsening the outlook. The yield on the 30-year U.S. Treasury slipped 2.32 basis points but held close to 19-year highs. Short-end yields eased, steepening the curve as doubts grow over the Federal Reserve's ability to anchor inflation expectations. US/ The Fed stood pat on rates earlier this week, but commentary from the chair confused markets. In Europe, the STOXX 600 index .STOXX hit a record high and was poised for its fourth consecutive month of gains. Futures tracking the tech-heavy Nasdaq 100 index NQcv1 rose 1.05%, while S&P 500 EScv1 and Dow YMcv1 futures rose 0.32% and 0.45%, respectively. South Korea's battered KOSPI .KS11 leapt 17.91%, mounting a record comeback after heavy losses earlier this week. The tech-heavy bourse, still about 30% off its all-time high, has become emblematic of the sharp swings in investor sentiment towards AI-related stocks. "Investors are increasingly focused on capital efficiency, financing and the long-term economics of hyperscalers' AI spending rather than on near-term demand," said Saverio Papagno, portfolio manager of North Square Growth Opportunities ETF. While worries about competition from China and AI hyperscalers' debt reliance swirl, selloffs could be a buying opportunity for long-term investors as "the sector will resume its leadership" once there is greater clarity, he said. The MSCI All Country World Price index .MIWD00000PUS gained 0.81% and was on track to snap a two-week losing streak. It will still end the month with losses of 0.40% should current levels hold. The yen had gained on Thursday, when Japan conducted yen-buying, dollar-selling intervention, a market source said. But such efforts have had limited success in reversing the weakness in the currency, and analysts say the outlook may not improve unless the central bank raises rates. The BOJ kept interest rates unchanged on Friday, but signalled its resolve to push up borrowing costs. At a press conference, BOJ Governor Kazuo Ueda said inflation risks were skewed to the upside, and the central bank was prepared to speed up the pace of rate hikes should monetary conditions be accommodative. "I wish they'd come out and just hiked maybe every other month through this year. It's difficult because of the gain in oil prices, but with core inflation pretty well-behaved I think they could have done that," Allspring's van Biljon said. July 31 (Reuters) - Global stocks rallied on Friday as robust results from Amazon and Microsoft reassured bruised investors to return to AI trade, while currency traders stayed alert to intervention a day after Japanese authorities likely stepped in to prop up the yen. An abrupt strengthening in the Japanese currency earlier in the session faded, with the dollar last up 0.35% at 160.09 yen JPY=EBS, after the Bank of Japan held interest rates steady. "The yen fundamentals and technicals are very poor. Intervention is not a credible, long-term solution," said Lauren van Biljon, senior portfolio manager, rates and FX, at Allspring Global Investments. Meanwhile, investor worries that the AI rally may soon run out of steam eased after Microsoft's MSFT.O earnings on Wednesday, where it forecast generating cash throughout fiscal 2027. Amazon AMZN.O followed a day later with its strongest cloud growth in more than four years, calming investors eager for signs that the billions being poured into AI buildout are bearing fruit.

GLOBAL MARKETS-Stocks climb as strong tech results reignite AI trade, yen swings

War and rates keep markets on edge

European and Asian markets extend gains

BOJ holds rates a day after intervention

Global stocks rally on strong tech results

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