World markets mixed after Dow record, AI stocks volatile

Global markets finished the week mixed after the Dow Jones Industrial Average broke another record. The Dow index rose 1.1% to close at 52,900.07, a historic high, boosted by dividend and interest rate-sensitive stocks in the US. However, the tech-heavy Nasdaq index fell 0.8% to 25,382.67, led by sharp declines in major chipmakers like Nvidia and Micron Technology. Markets also assessed US non-farm payroll data; employers added 57,000 jobs in May, lower than expected, which was viewed positively for the economy but also reinforced expectations that it could reduce pressure on the Federal Reserve (Fed) to raise interest rates.

Asian markets delivered a standout performance, marked by a dramatic recovery in South Korea. The Kospi index, which had lost nearly 8% in the previous session, surged a record 5.8% to close higher, driven by a strong rebound in the chip sector with Samsung Electronics and SK Hynix. Samsung Electronics shares gained 8.2%, while its rival SK Hynix rose 10.9%, highlighting volatility in regional tech stocks. Japan's Nikkei 225 index rose 1.5%, while Hong Kong's Hang Seng and China's mainland Shanghai Composite Index also moved higher.

European markets presented a mixed picture; Germany's DAX index rose 0.4% to 25,667.73, while France's CAC 40 index dipped slightly to 8,471.19. The UK's FTSE 100 index fell 0.4% to close at 10,613.55 following a pullback in major company shares. The closure of US markets for the Independence Day holiday led to lower global trading volumes, while investors continued to look for clues regarding upcoming economic data and central bank policies.

Sharp sell-offs in semiconductor (chip) companies following the recent rally based on the artificial intelligence (AI) craze continue to pressure indices. Investors are concerned that chip and data center spending might not deliver the expected productivity gains and profitability, with Micron Technology dropping sharply for the second consecutive day, losing another 5.5%. The downward movement in shares of Nvidia, one of the world's most valuable companies, and a 10.2% drop in Lam Research created a heavy picture for the S&P 500 index overall. Nvidia's weight within the index, with a market capitalization of approximately 4.7 trillion dollars, means even the smallest movement in the company's stock plays a critical role in determining the overall market direction.

Markets are also closely monitoring developments regarding global inflation pressures; concerns that rising oil prices due to the ongoing conflict with Iran would accelerate inflation eased somewhat as oil prices dropped below pre-war levels. This decline in oil prices increases the likelihood of inflation slowing in the coming months, which could lead the Fed to cut or halt planned interest rate hikes for the year. Interest rates staying low or rising modestly is viewed as a positive development for stock investors as it lowers borrowing costs and increases investment returns. In crypto markets, Bitcoin's recovery from lows triggered gains in stocks related to exchanges and crypto platforms like Robinhood and Coinbase.