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 ended a mixed week on a strong 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 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 look at the positives, penciling in more cuts next year and pushing the S&P 500 and Dow to fresh records. Asia followed suit, with Tokyo, Hong Kong, Sydney, Singapore, and Seoul up more than one percent, while Shanghai, Wellington, Taipei, Mumbai, and Manila also rose. London edged up at the open even as data showed the UK economy unexpectedly shrunk in October. Paris and Frankfurt also rose. Jakarta slipped, while Bangkok was barely moved as investors brushed off news that Thailand’s prime minister had dissolved parliament, paving the way for general elections early next year.
“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 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 tech rally that has seen many firms chalk up 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 investors might have to wait some time before seeing any returns — analysts say valuations could be overstretched and a bubble is forming.
Those worries 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. The news came a day after software firm Oracle reported that quarterly revenue had fallen 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.
In corporate news, tech investment giant SoftBank jumped 3.9 percent as Bloomberg reported that the firm is looking at more acquisitions, including data center operator Switch, as it seeks to build its influence in the AI sector.
– Key figures at around 0815 GMT –
Tokyo – Nikkei 225: UP 1.4 percent at 50,836.55 (close)
Hong Kong – Hang Seng Index: UP 1.8 percent at 25,976.79 (close)
Shanghai – Composite: UP 0.4 percent at 3,889.35 (close)
London – FTSE 100: UP 0.2 percent at 9,726.26
Dollar/yen: UP at 155.69 yen from 155.58 yen on Thursday
Euro/dollar: DOWN at $1.1737 from $1.1741
Pound/dollar: DOWN at $1.3383 from $1.3394
Euro/pound: UP at 87.70 pence from 87.65 pence
West Texas Intermediate: UP 0.6 percent at $57.95 per barrel
Brent North Sea Crude: UP 0.5 percent at $61.61 per barrel
New York – Dow: UP 1.3 percent at 48,704.01 (close)
© 2024 AFP
