Asian Stocks Gain on Global Equities Rally: Market Update

Asian Stocks Rise for a Second Consecutive Day

Asian stocks gained for a second day on Friday, buoyed by the ongoing global rally in equities. Markets across the US, Europe, and Japan have hit all-time highs, setting a positive tone for investors worldwide.

Australian, Taiwanese, and South Korean Equities Advance

Australian, Taiwanese, and South Korean equities also advanced, reflecting the overall positive sentiment in the region. However, Chinese stocks, including the CSI 300 Index, experienced a decline, deviating from the broader market trend. The Hang Seng Index in Hong Kong also swung between a rise and a fall.

Strong Performance in US Markets and Nvidia’s Surge

The largely bullish sentiment in Asia mirrored gains in the US markets. The S&P 500 and Nasdaq 100 indexes, along with MSCI’s all-country index, closed at new record highs. Nvidia Corp., the most valuable chipmaker, witnessed a remarkable surge of 16% driven by the ongoing artificial-intelligence frenzy. Additionally, recent data demonstrated the continued strength of the world’s largest economy.

Nvidia’s market capitalization soared by $277 billion in a single day, surpassing the recent $197 billion gain by Meta Platforms Inc. The company’s impressive performance impressed investors and traders, highlighting the exponential growth in demand for AI infrastructure.

Positive Signs for China’s Property Sector

The Hang Seng Mainland Properties Index rose for a fourth consecutive day, signaling improvement in China’s property sector after ten months of decline. Data released on Friday showed a slower decline in home prices for both new and existing units in China during January.

However, indications of China’s economic slowdown becoming more entrenched emerged, as data released on Thursday revealed a faster pace of rising foreclosed properties available for sale.

Garry Evans, BCA Research’s chief strategist for global asset allocation, suggested that the current trading rebound is not an indicator of a sustained recovery, stating, “At the moment, China’s economy still looks very weak.”

Global Market Updates and Hawkish Fed Commentary

Back in the US, traders reacted calmly to more hawkish commentary from the Federal Reserve. Treasury 10-year yields remained relatively stable at 4.32% on Thursday. Cash Treasuries trading remained closed in Asia on Friday due to the Japanese public holiday.

Federal Reserve Governor Lisa Cook addressed an event at Princeton University, stating, “At some point, as we gain greater confidence that disinflation is ongoing and sustainable, that changing outlook will warrant a change in the policy rate.”

AI Computing Boom and Valuation Concerns

The remarkable increase in Nvidia’s market capitalization, which has already exceeded $700 billion this year, reflects investors’ confidence in the company’s position as a key player in the AI computing boom.

The ongoing tech rally has led to elevated valuations for the Nasdaq 100 and the S&P 500. However, investors may be cautious about paying too much for stocks based on future growth, potentially limiting further gains.

Commodity Market and Corporate News

In the commodities market, oil prices slipped as investors assessed signs of a tightening market alongside concerns about demand. Gold prices fluctuated in response to US economic data and the Federal Reserve’s minutes, indicating policymakers’ contentment with maintaining higher interest rates if necessary.

In corporate news, Standard Chartered Plc announced a $1 billion share buyback, alongside better-than-expected fourth-quarter earnings.

Key Events This Week

• Germany IFO business climate, GDP – Friday
• ECB publishes 1- and 3-Year inflation expectations survey – Friday

Market Movements

Stocks:

• S&P 500 futures were little changed as of 1:02 p.m. Tokyo time
• Australia’s S&P/ASX 200 rose 0.3%
• Hong Kong’s Hang Seng fell 0.2%
• The Shanghai Composite was little changed

Currencies:

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.0825
• The Japanese yen was little changed at 150.48 per dollar
• The offshore yuan was little changed at 7.2069 per dollar

Cryptocurrencies:

• Bitcoin fell 1.2% to $51,045.95
• Ether fell 1.2% to $2,949.86

Bonds:

• The yield on 10-year Treasuries was little changed at 4.32%
• Japan’s 10-year yield was little changed at 0.715%
• Australia’s 10-year yield advanced four basis points to 4.19%

Commodities:

This story was produced with the assistance of Bloomberg Automation.

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