Asian Stocks Surge to Record Highs, Fueled by Japan and AI Optimism
Tokyo, October 23, 2023 – Asian stock markets climbed to new record levels today, driven by positive sentiment surrounding Japan’s economic policies and the ongoing surge in artificial intelligence (AI) investments. Gains were further supported by expectations of continued easing of monetary policy from the U.S. Federal Reserve.
Japan’s markets benefited from a “facilitator policy” adding global liquidity and bolstering risk appetite, according to analysts. The anticipated leadership of Takaishi, poised to become japan’s first female prime minister after winning the chairmanship of the Liberal Democratic Party on Saturday, initially strengthened growth expectations. However, her victory also sparked concerns about potential increases in government bond issuance, potentially delaying any interest rate hikes by the Bank of Japan this month. Bloomberg Market Live’s garfield Reynolds noted Japanese bond traders are “heading towards short deadlines…reflecting expectations of the decline of the return curve” anticipating a central bank response.
The AI sector continues to be a major market driver. Recent partnerships and the valuation of companies like “Oben AI” and “Chat BT” – reaching approximately $500 billion – have bolstered stock performance globally.
“The circumstances in the United States are leading these markets together,” explained Frank benzimra, head of Asian stock strategy at societe Generale in Hong Kong. “The Federal Reserve Council reduces the benefit in an economy that does not suffer from stagnation, and with the risk of upward inflation. This reflects positively on American stocks and gold, and has consequences for Asia.” The Federal Reserve is expected to offer another quarter-percentage-point interest rate reduction in October.
In Tokyo, defense and technology stocks saw significant gains.Shares of Kawasaki Heavy Industries, Jaban Steel Worm, and IHI Corp rose by over 10% amid expectations of increased government spending.
Despite the overall positive trend, some headwinds remain. The ongoing U.S. government shutdown, and the potential for prolonged financial stalemate, could disrupt the market’s upward momentum and increase volatility. Additionally, concerns over the stability of the French government, following President Emmanuel macron’s appointment of a largely unchanged cabinet, led to a decline in French bond futures during Asian trading.
