Evening digest: Amazon tops $3T, AstraZeneca Bristol Myers merger talks hit shares

Amazon crossed the $3 trillion market capitalization milestone after a strong earnings report fueled optimism over AI-driven cloud growth, while AstraZeneca shares slid after reports that the drugmaker held preliminary merger discussions with Bristol Myers Squibb.

Oil prices also dropped sharply as easing concerns over a potential US attack on Iran weighed on crude, while gold edged lower as investors assessed inflation risks and awaited key US labor market data.

Amazon tops $3 trillion as AWS growth boosts AI confidence

Amazon's market value surpassed $3 trillion for the first time on Monday after investors welcomed an earnings report that suggested the company's massive investments in artificial intelligence are beginning to translate into stronger financial performance.

Shares rose 5% during the session, extending gains after last week's earnings release and completing a sharp turnaround from the weakness seen over the previous three months.

The company's shares had fallen nearly 18% from their May record high as investors questioned whether heavy AI infrastructure spending across the technology sector would eventually deliver meaningful returns.

Those concerns eased after Amazon reported its fastest cloud growth in more than four years and raised its annual capital spending outlook.

The latest milestone places Amazon alongside Apple, Microsoft, Alphabet and Nvidia as one of the few publicly traded companies valued above $3 trillion.

AstraZeneca falls after Bristol Myers merger report

AstraZeneca shares dropped more than 6% after reports emerged that the company had held preliminary discussions with Bristol Myers Squibb regarding a potential merger that could create one of the world's largest pharmaceutical companies.

Reuters, citing a person familiar with the matter, confirmed an earlier Financial Times report that the companies had explored a possible combination.

Investors reacted cautiously, questioning the strategic rationale behind such a large acquisition while AstraZeneca continues to deliver strong organic growth.

Jefferies analysts also questioned the logic of the proposed transaction, arguing that expanding AstraZeneca's oncology pipeline could potentially be achieved through other avenues, including licensing agreements that the company has increasingly pursued, particularly in China.

A merger based on Friday's closing market values would create a pharmaceutical company worth nearly $400 billion, making it the world's fourth-largest listed drugmaker by market capitalization.

AstraZeneca has committed to investing $50 billion in US manufacturing and research by 2030 and recently completed a New York Stock Exchange listing.

Chief Executive Sir Pascal Soriot also said last week that the company does not need mergers and acquisitions to achieve its target of generating $80 billion in annual revenue by 2030.

Meanwhile, Bristol Myers Squibb continues to face pressure following its acquisition of Celgene and the approaching patent expirations of several blockbuster drugs.

Oil tumbles as Iran tensions ease

Oil prices fell around 5% on Monday after US President Donald Trump said he had called off planned military strikes against Iran and expressed hope that discussions between the two countries could resume.

Brent crude fell about 4.72% to $83.78 a barrel, while West Texas Intermediate declined roughly 5.24% to $80.24, with Brent heading for its lowest close in about three weeks.

Although Iran denied that any negotiations were scheduled, the possibility of reduced geopolitical tensions weighed on crude prices after months of volatility linked to the conflict.

Markets also monitored shipping disruptions across the Middle East.

Several Saudi oil tankers altered their routes following threats from Yemen's Houthi movement, while vessel traffic through the Strait of Hormuz slowed after reports of attacks.

Gold slips as investors await US jobs data

Gold prices gained reversing earlier losses as investors balanced ongoing geopolitical uncertainty against expectations that inflation could remain elevated, keeping the Federal Reserve cautious on interest rates.

Spot gold was up 0.34% to $4,054.68 an ounce, while US gold futures settled 0.05% higher at $4,109.10.

The metal has largely traded within a range between $4,000 and $4,200 for more than a month as higher energy prices continue to fuel inflation concerns.

Investors are now focused on a series of US labor market reports due this week, including the ADP employment report and the closely watched nonfarm payrolls release, for further clues on the Federal Reserve's next policy decision.

Elsewhere, South Korea's central bank announced plans to purchase gold from domestic producers as it seeks to diversify its sources of supply and increase its holdings of the precious metal.