By Gregor Stuart Hunter
SINGAPORE (Reuters) -A relief rally swept across Asian markets and lifted stocks in early trading on Thursday as investors cheered Nvidia’s market-topping earnings, while the dollar ticked up as traders braced for the release of delayed jobs data.
Tech-heavy markets Japan, South Korea and Taiwan led the rally after Nvidia CEO Jensen Huang touted blockbuster demand for its AI chips from giant cloud providers and shrugged off concerns about an AI bubble.
The remarks were backed by the world’s most valuable company’s forecast quarterly revenue well above Wall Street estimates, quelling some of the AI valuation fears that had triggered a rout in markets over recent sessions. Nvidia “delivered yet another master class in AI dominance,” said Tony Sycamore, market analyst at IG in Sydney. That sentiment was echoed in major regional markets. Tokyo’s Nikkei 225 soared as much as 4.2%, Korean stocks jumped 3.3%, and the Taiwanese market rallied 3.4% as tech manufacturers in the AI supply chain made big gains.
TSMC rose 4.3%, Samsung Electronics advanced 5.1%, SK Hynix jumped 4.5%, and Tokyo Electron surged 5.4%.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 1.2%, rebounding from a one-month low, while S&P 500 e-mini futures rose 1.3%. Stocks on Wall Street had snapped a four-day losing streak on Wednesday before Nvidia’s earnings release as investors questioned whether the AI valuation concerns were overblown.
In Asia, the Chinese market bucked the trend, with Hong Kong’s Hang Seng Index off 0.1% and a gauge of mainland stocks erasing an earlier gain of 0.7% to trade flat.
Earlier in the day, the People’s Bank of China left benchmark lending rates unchanged for the sixth straight month. Traders had expected the on-hold rates decision, though worries about weakness in China’s economic recovery have stoked market calls for more stimulus. The U.S. dollar index, which tracks the greenback’s strength against a basket of six major peers, advanced 0.2% to 100.3, hovering close to a two-week high. The yield on benchmark 10-year Treasury notes edged up just shy of a basis point to 4.1405% compared with its U.S. close of 4.131% on Wednesday. Traders are awaiting the release of September’s delayed jobs report, due for release later in the global day, to provide clues on the Federal Reserve’s next move. Minutes from the Fed’s October meeting released on Wednesday showed it cut interest rates even as policymakers cautioned that doing so could risk entrenched inflation and a loss of public trust in the U.S. central bank. Fed funds futures are pricing an implied 33% probability of a 25-basis-point cut at the next meeting on December 10, down from a 50% chance a day earlier, according to the CME Group’s FedWatch tool. An updated schedule for the release of the November jobs report, now delayed until December 16, is behind the move, said Gavin Friend, senior markets strategist at National Australia Bank in London. “That’s six days after the December FOMC meeting, and that’s why the 12 or 13 basis points of rate cuts that were priced in for December, 50% or so, has been immediately evaporated,” he said on a podcast. From the market’s perspective, he said, the data fog “plays to the Fed’s messaging that ‘we need to pause’.” The dollar rose 0.2% against the yen to 157.48, after the Japanese currency reached its weakest level in ten months during U.S. trading hours, and set a record-low against the euro.
The yen has weakened steadily since Prime Minister Sanae Takaichi was elected leader of her party, losing more than 6% of its value and defying a rise in Japanese yields on unease about the scale of borrowing needed to fund her stimulus plans. Against the dollar, the European single currency was 0.2% weaker on the day at $1.1517. Brent crude rose 0.5% to $63.80 per barrel as markets assessed the latest U.S. proposals to end the war in Ukraine and prepared for a U.S. deadline to cease operations with two major Russian oil firms. Cryptocurrencies retraced a recent selloff, with bitcoin and ether both up around 2% each. Precious metals markets were choppy, with spot gold last down 0.6% at $4,055.19 after earlier rising as much as 0.7%. [GOL/]
(Reporting by Gregor Stuart HunterEditing by Shri Navaratnam)
