Oil Drops to $100.93 as Asian Stocks Rally on AI Momentum

Crude oil prices fell further Tuesday as global equity markets moved higher on the back of a strong artificial intelligence rally.

U.S. stock futures pointed to a modest gain following Monday's session on Wall Street. The S&P 500 index had climbed 0.7% on Monday, recovering most of the ground it lost during a turbulent previous week. That move brought the benchmark index within 1.8% of its all-time high set earlier this month. The Dow Jones Industrial Average added 0.3%, while the Nasdaq composite, which is heavy in tech stocks, rose 0.8%.

The momentum carried into Asian trading hours. South Korea's Kospi index jumped more than 4% before settling 3.6% higher at 5,667.99 by midday. Chipmakers led the charge in Seoul. SK Hynix surged 7%, and Samsung Electronics gained 4.8%. In Tokyo, the Nikkei 225 added 2.2% to reach 63,542.77. Testing equipment maker Advantest jumped more than 10%, and SoftBank Group, an investor in OpenAI, climbed 7%.

Gains were not uniform across the region. Hong Kong's Hang Seng index gave up its early lead, slipping 0.2% to 23,174.44. The Shanghai Composite in China edged 0.1% lower to 3,692.58. Traders kept a close watch on China during the session, anticipating announcements from a closed-door high-level meeting of the ruling Communist Party. Taiwan's Taiex rose 0.5%, and the S&P/ASX 200 in Australia advanced 0.3% to 8,838.10.

The recent surge in U.S. markets has been driven largely by Nvidia, which rose 2.4% on Monday. The gain helped the chip company recover from a three-week losing streak, its longest such drop since June. However, sentiment remains mixed in other parts of the AI sector. Investors are weighing the industry's rapid growth against the high cost of borrowing. Companies face steep expenses to build data centers and purchase new AI chips, a factor that has caused stocks in the sector to fluctuate.

Meta Platforms experienced a volatile trading session after revealing plans to raise $35 billion through a stock sale to fund its AI investments. The company noted that Nvidia, Advanced Micro Devices, and Broadcom have indicated they may purchase a combined total of $5 billion of stock in the offering. Meanwhile, Anthropic, a major AI developer, released details on its financial losses as it prepares for its first public stock sale in the U.S. market. SpaceX, the rocket company owned by Elon Musk, also saw stock price swings after announcing a roughly $40 billion deal with an entity managed by Apollo Global Management to lease AI computing power.

Investors are now turning their attention to upcoming earnings reports from major technology firms. These results will offer new data on how AI spending is translating into profits and productivity. Alphabet and Microsoft are scheduled to release their quarterly results on Wednesday. Amazon will follow on Thursday. In total, roughly one out of every three stocks in the S&P 500 will report its latest quarterly results during this week.

In other global markets, Brazilian stocks fell sharply after President Luiz Inácio Lula da Silva won reelection. The result surprised investors who worry he may increase government spending, putting more pressure on the country's debt. The Bovespa stock index in Brazil dropped roughly 14%. In the U.S. bond market, yields on long-term Treasurys declined. The yield on the 10-year Treasury eased to 4.98% from 5.00% late Friday. The two-year Treasury yield rose to 4.71% from 4.69% late Friday, tracking expectations for the Federal Reserve's next move.

The Federal Reserve is expected to conclude its meeting Wednesday without changing the federal funds rate. The central bank hiked rates last month for the first time in three years to slow inflation, which remains high. In commodities, Brent crude oil, the international standard, fell 0.8% to $109.82 a barrel. U.S. benchmark crude dropped 0.8% to $100.93 per barrel. Currency markets showed minor shifts, with the dollar rising to 157.65 Japanese yen from 157.50 yen, while the euro slipped to $1.1173 from $1.1176.