By Gregor Stuart Hunter
SINGAPORE (Reuters) -A relief rally swept across Asian markets and lifted stocks 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. Though gains cooled slightly as the day progressed, Tokyo’s Nikkei 225 was still up a sizable 2.6%, Korean stocks jumped 2.3%, and the Taiwanese market rallied 3.2% as tech manufacturers in the AI supply chain made big strides.
TSMC rose 4.3%, Samsung Electronics advanced 5.3%, SK Hynix gained 2.2%, and Tokyo Electron surged 5.4%.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 1.1%, rebounding from a one-month low, while S&P 500 e-mini futures rose 1.3%. The rebound was given fresh impetus by a Reuters report that the U.S. might delay long-promised semiconductor tariffs to help ease tensions with China.
In early European trades, pan-region futures advanced 0.8%, German DAX futures rose 0.7%, and FTSE futures were up 0.6%.
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 after an earlier rally, with Hong Kong’s Hang Seng Index off 0.3% and a gauge of mainland stocks erasing an earlier gain to decline 0.5%.
Markets in Japan were also assessing news that the administration of Prime Minister Sanae Takaichi is reportedly preparing to pass a stimulus package that would be the country’s biggest since the COVID-19 pandemic. The Japanese government bond market sold off sharply, with yields surging to record highs.
The U.S. dollar index, which tracks the greenback’s strength against a basket of six major peers, advanced 0.2% to 100.25, hovering close to a two-week high.
The yield on benchmark 10-year Treasury notes edged up 1.1 basis points to 4.1406% compared with its U.S. close of 4.131% on Wednesday.
Traders are awaiting the release of September’s delayed jobs report, due 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 0.3% against the yen to 157.585, 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 $1.1520.
Brent crude rose 0.2% to $63.64 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 up 1.8% at $92,217.47 and ether 1.1% higher at $3,021.11.
Precious metals markets were choppy, with spot gold last down 0.4% at $4,064.04 after earlier rising as much as 0.7%. [GOL/]
(Reporting by Gregor Stuart HunterEditing by Shri Navaratnam)
