Hong Kong (AFP) – Asian equities rose Friday as investors tracked a record day on Wall Street in the wake of the Federal Reserve’s latest interest rate cut. The gains came despite renewed concerns about tech valuations after disappointing earnings from sector giants Oracle and Broadcom. Markets were on course to end a mixed week on a positive note, with eyes now on the release of delayed US jobs data next week, which could provide insight into the central bank’s plans for next year.
Figures released Thursday showed initial jobless claims rose more than expected in the week ended December 6, marking their biggest increase for five and a half years and reinforcing the view of a softening labor market. Traders welcomed Fed boss Jerome Powell’s post-meeting comments Wednesday, which were seen as less hawkish than feared, but the policy board’s statement suggested it could hold off on a fourth straight cut in January. Analysts noted that the fact that three decision-makers unusually dissented complicated the policy outlook.
Still, investors in New York continued to focus on the positives, penciling in more cuts next year and pushing the S&P 500 and Dow to fresh records. Asia broadly followed suit, with Tokyo, Hong Kong, Sydney, Singapore, and Seoul up around one percent, while Wellington, Taipei, and Manila also saw gains. Conversely, Shanghai and Jakarta slipped.
“So, (the Fed being) not as hawkish as it could have been and despite only one cut next year penciled in, a new Fed chair and a cooling jobs market means markets think there is more to come,” said Neil Wilson at Saxo Markets. The gains came despite worries about an AI-led rally in tech firms that has seen many companies record eye-watering gains, with chip giant Nvidia becoming the first to break a $5 trillion valuation in October.
With warnings that the hundreds of billions of dollars pumped into AI may have been overdone, and that investors might have to wait some time before seeing returns, analysts say valuations could be overstretched and a bubble may be forming. Those concerns were compounded Thursday as earnings from chip titan Broadcom failed to meet investors’ lofty expectations and its outlook for AI sales disappointed. Its shares fell more than four percent in after-hours trade.
This news came a day after software firm Oracle reported quarterly revenue that fell short of forecasts and revealed a surge in spending on data centers to boost AI capacity. Shares in Oracle ended down 10.8 percent in New York.
– Key figures at around 0230 GMT –
Tokyo – Nikkei 225: UP 0.9 percent at 50,610.04 (break)
Hong Kong – Hang Seng Index: UP 1.1 percent at 25,799.01
Shanghai – Composite: DOWN 0.5 percent at 3,854.15
Dollar/yen: UP at 155.73 yen from 155.58 yen on Thursday
Euro/dollar: DOWN at $1.1734 from $1.1741
Pound/dollar: DOWN at $1.3391 from $1.3394
Euro/pound: DOWN at 87.62 pence from 87.65 pence
West Texas Intermediate: UP 0.7 percent at $58.02 per barrel
Brent North Sea Crude: UP 0.7 percent at $61.69 per barrel
New York – Dow: UP 1.3 percent at 48,704.01 (close)
London – FTSE 100: UP 0.5 percent at 9,703.16 (close)
© 2024 AFP
