(Feb 19): Stocks rallied in Asia with tech shares leading gains as concern about the valuations of artificial intelligence (AI) firms eased. Samsung Electronics Co shares surged as much as 4.7%.
The MSCI Asia-Pacific Index climbed 0.6%, with South Korea’s benchmark Kospi rising to a fresh all-time high. That was after the S&P 500 rose 0.6% Wednesday and the Nasdaq 100 gained 0.8%. Oil steadied after its biggest daily gain since October, while the Australian dollar strengthened following robust jobs data.
The tech rebound suggests concerns over the disruption of AI were easing, just as several stock pickers have flagged buying opportunities. Also lifting the mood were comments from people familiar that OpenAI is close to finalising the first phase of a new funding round that’s likely to bring in more than US$100 billion ($126.81 billion).
“You are seeing that the ability to find growth and opportunity outside of the Mag Seven complex and the AI complex as well, but that’s also on a geographical basis as well,” Chris Weston, head of research at Pepperstone Group Ltd, said on Bloomberg Television. “We’ve seen big outperformance for a while now from Europe and Japan and the Kospi.”
The MSCI Asia-Pacific gauge has climbed about 12% this year, while Korea’s Kospi has surged more than 30%. US stocks have been largely rangebound, with the S&P 500 Index little changed since the end of December.
See also: Asian shares advance, oil holds losses on Iran
Samsung Electronics shares jumped to a fresh record following a newspaper report that the company is negotiating to sell a new generation of ultrafast chips at around US$700, or about 20% to 30% higher than its previous model.
OpenAI’s record-breaking financing deal would give the start-up maker of ChatGPT additional capital to build out its AI tools. The company may have an overall valuation of more than US$850 billion, including the latest financing, according to some of the people familiar.
Financial markets remained shut in mainland China, Hong Kong and Taiwan for the Lunar New Year holiday.
See also: Oil gains on Iran, stocks tepid in holiday trading
The Australian dollar rose against all major peers after a report showed the nation’s unemployment rate holding at 4.1%, boosting bets on an interest-rate hike in May. The Aussie climbed as much as 0.4% to 70.71 US cents.
“A solid Australian labour market report with no rise in the unemployment rate which remains on the tighter side, should help cement support for the Aussie above the 70 US cent mark,” said Rodrigo Catril, a strategist at National Australia Bank Ltd.
Oil steadied after jumping on Wednesday following a report that American military intervention in Iran may come sooner than expected.
Brent held above US$70 a barrel, after adding 4.3% on Wednesday, while West Texas Intermediate traded near US$65. Axios reported that any US military operation would likely be a weeks-long campaign and that Israel’s government is pushing for a scenario targeting regime change in the Islamic republic.
Gold was flat, after rising 2% on Wednesday, with some Asian markets still closed for holidays and traders focused on the Fed’s next move on interest rates.
Japan’s sale of 20-year government bonds drew weaker demand than its 12-month average as a decline in yields after Prime Minister Sanae Takaichi’s election victory damped investor appetite.
US economic data published Wednesday showing the biggest increase in industrial production in January bolstered investor sentiment, while orders for business equipment rose in December by more than projected and housing starts hit a five-month high.
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Stock market bulls shrugged off minutes of the Federal Open Market Committee’s January meeting that revealed “several participants” said they would have preferred a post-meeting statement that raised the possibility of raising the federal funds rate “if inflation remains at above-target levels”.
Fed funds futures pricing on Wednesday indicated traders slightly pared bets on rate cuts this year but still expect a further two 25-basis-point reductions in 2026.
“From our perspective, the minutes support our view that rate cuts are off the table for the foreseeable future,” said Charlie Ripley, a fund manager at Allianz Investment Management.
Corporate highlights:
- Mark Zuckerberg testified that it’s “very difficult” to enforce Instagram’s age limits as he sought to defend the platform during a landmark trial over social media addiction.
- Elliott Investment Management is pressing London Stock Exchange Group plc to launch a review of its portfolio and pursue a £5 billion (US$6.8 billion or $8.55 billion) share buy-back over the next 12 months, according to people familiar with the matter.
- Alphabet Inc unveiled several new initiatives to support its expansion in India, including new fibre-optic routes that will connect the country with the US and other locations in the Southern Hemisphere.
- More issuers are dropping Mizuho Securities Co from bond underwriting roles after the Securities and Exchange Surveillance Commission began investigating the firm following reports of suspected insider trading.
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 1.26pm Tokyo time
- Nikkei 225 futures (OSE) rose 0.6%
- Japan’s Topix rose 1.2%
- Australia’s S&P/ASX 200 rose 0.9%
- Euro Stoxx 50 futures were little changed
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at US$1.1787
- The Japanese yen fell 0.2% to 155.19 per dollar
- The offshore yuan fell 0.2% to 6.9036 per dollar
Cryptocurrencies
- Bitcoin rose 0.8% to US$66,843.9
- Ether rose 1.6% to US$1,972.76
Bonds
- The yield on 10-year Treasuries advanced two basis points to 4.10%
- Japan’s 10-year yield advanced one basis point to 2.145%
- Australia’s 10-year yield advanced seven basis points to 4.79%
Commodities
- West Texas Intermediate crude rose 0.4% to US$65.48 a barrel
- Spot gold rose 0.1% to US$4,982.75 an ounce
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