(Feb 10) : Asian equities were primed for fresh highs Tuesday, tracking a further recovery in US tech stocks that followed an artificial intelligence-driven rout.
Equity index futures for Japan, Australia and Hong Kong all pointed to gains, placing an MSCI gauge of the region’s stocks on pace for a new high after closing at a record level on Monday.
The S&P 500 rose 0.5% and the Nasdaq 100 climbed 0.8%, as some of the hardest-hit stocks in last week’s selloff rebounded. Oracle Corp. jumped 9.6% and an ETF focused on software names extended a back-to-back advance to almost 7%.
Treasuries were were little changed as traders gear up for Wednesday’s US jobs report. The dollar fell and gold topped US$5,000.
The moves signaled easing concerns around the AI trade that came to a head in the past two weeks, lashing software companies and casting a pall over high-spending mega-caps.
“When markets sell off like certain areas in tech have, there’s often knee-jerk rallies,” said Sameer Samana at Wells Fargo Investment Institute. “Time will tell if we need a retest or if enough value was created.”
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In order to finance its AI ambitions, Alphabet Inc. is set to raise US$20 billion from a US dollar bond offering — more than the US$15 billion expected — and is also pitching investors on what would be its first ever offerings in Switzerland and the UK. The latter would include a rare sale of 100-year bonds.
In Asia, data set for release includes gross domestic product for Singapore, business confidence in Australia and Japanese machine tool orders. Japan is also set to sell 10-year linker bonds later Tuesday.
The yen traded around 156 per dollar after a Monday rally as Prime Minister Sanae Takaichi secured a historic election triumph. Japanese stocks hit a record high.
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Silver climbed around 7% Monday. while oil edged higher after the US advised ships to steer clear of Iranian waters when navigating the Strait of Hormuz. Bitcoin wavered near US$70,000.
Traders are facing a busy week of US economic data that include the two most-consequential snapshots — employment and inflation.
The jobs report - due Wednesday - is expected to show payrolls rose 69,000 in January. The unemployment rate is seen steady at 4.4%. The data will also include historical revisions that are anticipated to show a sizable downward adjustment to payrolls in the year through March 2025.
“A so-so jobs report probably won’t have much of an impact, but traders expecting stocks to bounce on weak numbers have to consider the possibility that a choppy stock market may simply treat good news as good and bad news as bad,” said Chris Larkin at E*Trade from Morgan Stanley.
“We think the stabilizing labor market — marked by modest hiring and limited layoffs — should help keep the Fed on track to cut rates once or twice this year, assuming price pressures continue to ease,” said Angelo Kourkafas at Edward Jones. “Lower interest rates should reduce borrowing costs for consumers and businesses, helping support the economy and corporate profits.”
In Friday’s consumer price index, economists will look for more evidence that inflation is on a downward trend. Before that, figures on Tuesday are projected to show solid retail sales.
Corporate Highlights:
- Microsoft Corp. shares were downgraded for the second time in less than a week as Wall Street grows increasingly wary about the potential disruption software stocks face from artificial intelligence.
- Meta Platforms Inc. was given a European Union warning over policies that block the use of rival Artificial Intelligence assistants on WhatsApp, raising the possibility of further tensions with the Trump administration over the regulation of US tech companies.
- While most Americans were transfixed by this year’s Super Bowl proceedings on Sunday night, Elon Musk took to X to proclaim that SpaceX would focus on building out a base on the moon before sending humans to Mars.
uploaded by Isabelle Francis
