Nvidia Fuels AI Rally as Rate-Hike Bets Weigh on Bonds
Global markets moved higher on Thursday as Nvidia’s bullish outlook revived confidence in the artificial intelligence investment cycle, while bond markets came under pressure as investors increased expectations for further interest-rate hikes. The stronger outlook from the world’s leading AI-chipmaker helped support equities despite persistent inflation concerns.
Nasdaq 100 futures climbed around 0.9% after Nvidia forecast strong revenue growth through 2028, sending its shares 4.7% higher in after-hours trading. The positive outlook also lifted other AI-linked companies, including Marvell and Sandisk, while European equity futures edged higher.
Asian stocks followed the stronger technology sentiment, with semiconductor companies among the biggest contributors. SK Hynix and Samsung advanced, while South Korea’s Kospi gained 1.3%, reinforcing its position as an important barometer of global AI investment.
Nvidia’s guidance provided fresh evidence that demand for AI infrastructure remains strong. The company expects revenue to grow by around 70% in fiscal 2028, significantly above analysts’ expectations of roughly 45%. The forecast helped ease concerns that the rapid expansion in AI investment could be approaching a peak and strengthened expectations that corporate spending on advanced computing infrastructure will remain robust.
However, the positive equity sentiment was accompanied by renewed pressure across global bond markets. Treasuries declined across the curve as traders increased bets that the Federal Reserve may eventually need to raise interest rates again to contain persistent inflation. Two-year Treasury yields climbed to 4.22%, with markets now fully pricing in a rate hike by December.
The shift in rate expectations also weighed on government bonds across other major economies. Australian, New Zealand and Japanese bonds declined as investors increased expectations for further monetary tightening. In Japan, Bank of Japan Deputy Governor Ryozo Himino kept the possibility of a rate increase next month open, offering little resistance to growing market expectations for another hike.
South Korea’s central bank also tightened policy, raising its benchmark interest rate for a second consecutive meeting. The decision reflects concerns over inflation risks alongside stronger-than-expected economic growth, supported by the country’s unprecedented semiconductor boom. The South Korean Won strengthened following the decision.
Australia remained another major focus for global rate markets after hotter-than-expected inflation prompted economists at major institutions to bring forward expectations for another rate increase. Forecasts from Goldman Sachs and Commonwealth Bank now point to the possibility of a hike as early as next month, reversing earlier expectations that rates would remain unchanged for the rest of the year.
In commodities, Gold gained 0.6% to around $4,620 an ounce as investors continued to monitor the changing interest-rate and geopolitical environment. Brent crude traded near $87.40 a barrel and edged lower after a volatile session, with traders balancing signs of diplomatic progress in the Middle East against increasing Russia-Ukraine tensions.
Geopolitical risks around the Strait of Hormuz also remained elevated. Iran is reportedly considering adding insurers of vessels that violate its rules to a blacklist, according to Nour News. Any further restrictions on shipping or insurance could increase the cost and complexity of energy transportation through the strategic waterway, keeping a geopolitical risk premium embedded in oil markets.
Meanwhile, Nvidia confirmed that it sold a limited number of H200 artificial-intelligence chips to customers in China during the latest quarter. Shipments remained below the total amount permitted under the current US framework, highlighting the continuing restrictions surrounding advanced semiconductor exports to China and the increasingly complex relationship between AI demand, technology policy and geopolitics.
Overall, markets are balancing two powerful forces: Nvidia’s strong outlook is reinforcing the AI-driven equity rally, while persistent inflation is pushing investors to reassess the global interest-rate outlook. The combination of stronger AI investment, renewed rate-hike expectations and ongoing geopolitical risks is likely to keep volatility elevated across equities, bonds, currencies and commodities.
FISG Daily Market Wrap provides a concise view of the forces moving global markets, helping investors stay informed and better prepared for what comes next.
