Global Markets Rally as Nikkei Tops 67,000 and AI Euphoria Offsets Gulf Jitters

Global equity markets continued their relentless ascent at the start of June, with Wall Street notching fresh records and Japan’s Nikkei 225 breaking through the 67,000 level for the first time. The S&P 500 rose 0.2 per cent to log its seventh consecutive gain and ninth straight winning week, its longest such streak since 2023, while the Dow Jones and Nasdaq also hit new highs. In Tokyo, the Nikkei surged more than 900 points to an intraday record of 67,231.28, powered by large-cap semiconductor names, as the positive momentum from Friday’s US session rippled across the Pacific.

The rally was fuelled by a potent cocktail of easing geopolitical anxiety and relentless enthusiasm for artificial intelligence. Crude oil prices, which had spiked on fears of a disruption in the Strait of Hormuz, retreated late last week on signals that Washington and Tehran were edging closer to a ceasefire agreement. “While uncertainties remain, the acute risk phase for the global economy should be over if tankers can begin moving again,” said Michael Feroli, chief US economist at JPMorgan. However, he cautioned that oil prices would likely stay elevated as inventories are rebuilt and damaged infrastructure is repaired. Indeed, Brent crude edged back up 1.9 per cent to near $93 a barrel on Monday, reflecting the market’s assessment that a full resolution remains elusive.

Viewed from Asian trading floors, the AI supply chain proved a more immediate and powerful force. The Nikkei’s surge mirrored gains in South Korea’s Kospi, up 1.3 per cent, and Taiwan’s benchmark, which climbed nearly 6 per cent last week, as investors bet on insatiable demand for advanced chips and related hardware. “There is significant excess demand in the semiconductor sector,” noted Avishai Karouani, chief executive of Pe’ilim Investment Portfolio Management in Tel Aviv. That demand helped the tech-heavy Nasdaq Composite leap 8.4 per cent over the course of May, dragging the broader S&P 500 to a 5 per cent monthly gain even as the Dow lagged.

Yet beneath the euphoria, some indices diverged. Australian futures pointed to a modest 0.2 per cent decline at the open, and the Australian dollar softened to around 71.7 US cents, hinting that the resources-heavy market was weighing the mixed signals on global energy demand. For global investors, the coming weeks will test whether the AI investment cycle can continue to insulate equities from a still-fragile geopolitical landscape. If US-Iran talks stall and oil prices spike anew, the rotation into tech may become a flight to safety rather than a growth story.