U.S. stock futures moved higher on Wednesday after President Donald Trump paused a military initiative aimed at reopening the Strait of Hormuz and signalled progress toward a possible peace agreement with Iran.
At the same time, oil prices retreated from recent highs, while strong artificial intelligence-related demand boosted earnings at Advanced Micro Devices (NASDAQ:AMD). In Asia, Samsung Electronics (USOTC:SSNHZ) surpassed a $1 trillion market valuation for the first time.
Futures advance as investors welcome easing geopolitical tensions
By 03:31 ET, Dow Jones futures were higher by 79 points, or 0.2%, while S&P 500 futures gained 20 points, or 0.3%. Nasdaq 100 futures climbed 186 points, or 0.7%.
Wall Street indices had already closed modestly higher in the previous session as the White House attempted to calm concerns following renewed violence around the Strait of Hormuz earlier in the week.
Investors were also encouraged by a generally resilient U.S. earnings season, suggesting that major companies have so far managed to withstand economic uncertainty linked to the conflict involving Iran.
Attention is now turning toward another wave of quarterly earnings later this month, including results from AI chip giant Nvidia (NASDAQ:NVDA) and retail heavyweight Walmart (NYSE:WMT).
Trump suspends “Project Freedom”
Trump announced on Tuesday that “Project Freedom” — the U.S. military operation designed to reopen the Strait of Hormuz by escorting commercial vessels through the strategic waterway — would be halted “for a short period of time.”
The mission had only recently begun and was quickly followed by fresh attacks across the strait and wider Gulf region.
In a social media statement, Trump said the decision was partly made at the request of Pakistan, which has frequently acted as a mediator between Washington and Tehran. He also stated that “great progress” had been achieved toward a peace agreement with Iran.
The announcement came shortly after talks between Iranian and Chinese foreign ministers. China remains a major importer of Iranian oil, and reports suggest Beijing may be attempting to discourage Tehran from escalating tensions with Washington ahead of a scheduled meeting next week between Chinese President Xi Jinping and Trump.
Oil prices retreat but remain elevated
Crude oil prices declined following Trump’s announcement, with Brent crude futures falling 1.5% to $108.22 per barrel.
Despite the pullback, Brent prices remain significantly above pre-conflict levels near $70 per barrel.
The Strait of Hormuz — through which roughly 20% of global oil supplies are transported — remains effectively closed to tanker traffic, with both the United States and Iran maintaining blockades in the area.
The continued disruption to shipping routes has intensified concerns over higher global inflation and slower economic growth.
AMD beats forecasts as AI demand drives data center growth
Shares of Advanced Micro Devices (NASDAQ:AMD) surged in extended trading after the chipmaker reported stronger-than-expected quarterly results, driven by robust demand in its data center business.
AMD posted first-quarter net income of $1.38 billion, compared with $709 million a year earlier. Adjusted earnings per share reached $1.37, ahead of Wall Street forecasts of $1.28.
Revenue jumped 38% year on year to $10.25 billion, also exceeding analyst estimates. Sales within the company’s data center division rose 57%, supported by demand for EPYC processors and increased shipments of Instinct graphics processing units.
Chief executive Lisa Su said server growth is expected to “accelerate meaningfully” as AMD expands supply capacity to meet strong demand.
However, analysts continue to compare AMD’s competitive position against rivals including Nvidia and Broadcom (NASDAQ:AVGO).
Analysts at BofA Securities noted that while they remain “big believers in AMD’s execution,” the company “is still exposed to uncertain share allocation” among competitors supplying OpenAI, the developer of ChatGPT.
Samsung surpasses $1 trillion valuation
Samsung Electronics (USOTC:SSNHZ) exceeded a $1 trillion market capitalisation on Wednesday for the first time, becoming only the second Asian company after Taiwan Semiconductor Manufacturing Company (NYSE:TSM) to achieve the milestone.
Samsung shares have recently reached consecutive record highs and have more than doubled in value this year.
Part of the latest rally was linked to a Bloomberg report indicating that Apple (NASDAQ:AAPL) has held exploratory discussions with Samsung and Intel (NASDAQ:INTC) regarding production of processors for future devices.
Samsung has also benefited from strong demand for memory chips used in AI systems, particularly high-bandwidth memory products, amid tight global supply conditions.
Advanced Micro Devices stock price