Asian equities experienced a rise on Friday as investors reacted to a record-breaking day on Wall Street, which occurred in the wake of the Federal Reserve’s latest interest rate cut announcement.
These market gains were registered despite renewed concerns regarding technology stock valuations, which emerged following disappointing earnings reports from sector leaders Oracle and Broadcom.
Markets concluded a mixed trading week on a positive note, with attention now focused on the release of delayed United States jobs data next week; these figures are anticipated to offer key insights into the central bank’s policy plans for the coming year.
Figures released on Thursday indicated that initial jobless claims saw a larger-than-expected increase in the week that ended on December 6, registering the biggest jump in five and a half years and reinforcing the perception of a softening labour market.
Traders generally welcomed the comments made by Fed boss Jerome Powell following the meeting on Wednesday, as they were perceived as less hawkish than the market had feared, though the policy board’s official statement suggested it might refrain from executing a fourth consecutive rate cut in January.
Furthermore, analysts noted that the policy outlook was complicated by the fact that three decision-makers unusually dissented from the majority decision.
Despite this complexity, investors in New York focused on the positive outlook, anticipating further rate cuts next year, which drove the S&P 500 and the Dow Jones Industrial Average to establish fresh record highs.
Asia mirrored this positive sentiment, with major indices in Tokyo, Hong Kong, Sydney, Singapore, and Seoul all recording gains exceeding one percent, while markets in Shanghai, Wellington, Taipei, Mumbai, and Manila also closed higher.
Jakarta was an exception, registering a slip, and Bangkok remained largely unchanged as investors overlooked the news that Thailand’s prime minister had dissolved parliament, a move that prepares the ground for general elections scheduled for early next year.
Neil Wilson, an analyst at Saxo Markets, provided commentary on the investor sentiment: “So, (the Fed being) not as hawkish as it could have been and despite only one cut next year pencilled in, a new Fed chair and cooling jobs market means markets think there is more to come.”
The overall market gains came despite lingering anxieties about the AI-led tech rally, a boom which has seen numerous companies achieve astonishing increases in value, including chip giant Nvidia becoming the first to cross a $5 trillion valuation mark in October.
With warnings suggesting that the hundreds of billions of dollars poured into AI might have been excessive—and that investors could face a long wait before seeing commensurate returns—analysts have raised concerns that valuations may be overstretched and a potential bubble could be forming.
These worries were intensified on Thursday as the earnings report from chip titan Broadcom failed to meet the high expectations of investors, and its forecast for AI sales proved to be disappointing. Broadcom’s shares consequently dropped more than four per cent in after-hours trading.
This news followed a day after software firm Oracle reported that its quarterly revenue had fallen short of market forecasts and disclosed a significant surge in its spending on data centres to boost its AI capacity.
Shares in Oracle ultimately closed down 10.8 per cent in New York trading.
In corporate news, shares of tech investment giant SoftBank saw a 3.9 per cent jump as Bloomberg reported that the firm is exploring additional acquisitions, including data centre operator Switch, as part of its strategy to expand its influence within the rapidly growing AI sector.
Key financial figures at approximately 0710 GMT were as follows:
Tokyo – Nikkei 225: UP 1.4 per cent at 50,836.55 (close)
Hong Kong – Hang Seng Index: UP 1.6 per cent at 25,950.53
Shanghai – Composite: UP 0.4 per cent at 3,889.35 (close)
Dollar/yen: UP at 155.68 yen from 155.58 yen on Thursday
Euro/dollar: DOWN at $1.1737 from $1.1741
Pound/dollar: DOWN at $1.3394 from $1.3394
Euro/pound: DOWN at 87.63 pence from 87.65 pence
West Texas Intermediate: UP 0.6 per cent at $57.94 per barrel
Brent North Sea Crude: UP 0.5 per cent at $61.60 per barrel
New York – Dow: UP 1.3 per cent at 48,704.01 (close)
London – FTSE 100: UP 0.5 per cent at 9,703.16 (close)
