Asian stocks rose modestly in thin holiday trading after US equities whipsawed, with investors concerned about the outlook for AI following days of turbulence that pulled key gauges back from record highs.
Stocks rose in Japan and Australia, lifting the MSCI Asia Pacific Index 0.6% higher after three straight days of declines. The advance followed a volatile day on Wall Street, with the S&P 500 finishing up 0.1%. Gold and silver edged lower Wednesday. West Texas Intermediate crude oil held its losses from the prior session on signs the US and Iran have made progress in nuclear talks.
Trading volumes are expected to be light, with markets in China, Hong Kong and several regional exchanges remaining closed for the Lunar New Year holiday.
Anxiety around artificial intelligence is also a concern in Asia, home to much of the world's chip development and hardware manufacturing. The upheaval driven by AI highlights a clash between fears the technology will upend swaths of the economy and doubts that massive spending on it will generate meaningful returns anytime soon.
Photo Credit: Bloomberg
“The market is still close to record highs, but it may not feel that way to some investors because of the sharp selloffs that seem to derail upswings almost as soon as they begin,” said Chris Larkin at E*Trade from Morgan Stanley. “If that theme persists, it could result in a bumpy road for the market, even if the overall trend is to the upside.”
Investors are also focused on the Federal Reserve's path for interest rates after strong jobs data and benign inflation readings last week.
Fed Governor Michael Barr said on Tuesday rates should remain steady “for some time,” until officials see more evidence that inflation is heading toward the central bank's 2% goal. Fed Bank of Chicago President Austan Goolsbee, meanwhile, said there was potential for more cuts this year if inflation continued on its path toward that target.
The yield on 10-year Treasuries was slightly lower at 4.05% on Wednesday after gaining about one basis point in the last session.
In trade-related news, Japan plans to invest $36 billion in US oil, gas and critical mineral projects, the first tranche of its $550 billion commitment under the agreement it struck with US President Donald Trump.
Attention in Asia will shift to the Reserve Bank of New Zealand's policy decision later Wednesday.
All economists in a Bloomberg survey expect the Official Cash Rate to remain on hold, with focus on the bank's policy rate outlook and tone of Anna Breman's first post-meeting press conference since taking over as governor last year.
“Markets are going into it with a hawkish mindset, with a hike priced in by about October and a second by around February next year,” ANZ Group Holdings Ltd. strategists including David Croy wrote in a note to clients. “But that is shy of the elevated expectations seen a few weeks ago, and that cooling of expectations suggests we will see less of a reaction if the RBNZ is cautious today.”
Corporate News:
- Warner Bros. agreed on Tuesday to reopen negotiations with Paramount after receiving a revised proposal last week that sweetened some of its terms.
- Berkshire Hathaway Inc. slashed its stake in Amazon.com Inc. by more than 75% in the fourth quarter, while also building a stake in the New York Times Co.
- National Australia Bank Ltd.'s profit climbed in the first quarter amid business banking growth and strength in home lending.
- Apple Inc. is accelerating development of three new wearable devices as part of a shift toward artificial intelligence-powered hardware.
- Meta Platforms Inc. has agreed to deploy “millions” of Nvidia Corp. processors over the next few years, tightening an already close relationship between two of the biggest companies in the artificial intelligence industry.
- Palo Alto Networks shares fell 8% in extended trading, after the security software company gave a forecast for adjusted earnings that was weaker than expected for both the third quarter and the full year.
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 9:20 a.m. Tokyo time
- Japan's Topix rose 1.1%
- Australia's S&P/ASX 200 rose 0.5%
- Euro Stoxx 50 futures rose 0.1%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.1852
- The Japanese yen was little changed at 153.25 per dollar
- The offshore yuan was little changed at 6.8864 per dollar
- The Australian dollar was little changed at $0.7082
Cryptocurrencies
- Bitcoin fell 0.1% to $67,553.84
- Ether fell 0.2% to $1,995.68
Bonds
- The yield on 10-year Treasuries was little changed at 4.05%
- Japan's 10-year yield declined two basis points to 2.115%
- Australia's 10-year yield advanced three basis points to 4.71%
Commodities
- West Texas Intermediate crude fell 0.1% to $62.25 a barrel
- Spot gold fell 0.3% to $4,865.48 an ounce
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