Asian shares ride Nvidia wave

Sydney — Global stock markets were on course for a week of heady gains on Friday as artificial intelligence (AI) darling Nvidia’s stunning results sparked a wave of record highs from Asia to Europe and the US, while the yen nursed losses on a range of currencies.

Nvidia surged 16.4%, adding a record $277bn in market value on Thursday. The Santa Clara, California-based company’s results supercharged a global AI-led rally in technology stocks, propelling the S&P 500, the Dow Jones Industrials, Europe’s Stoxx 600 and Japan’s Nikkei share average to record highs.

Tokyo is closed for a holiday on Friday, with the Nikkei futures trading up about 300 points.

Some of the regional tech shares were taking a breather after a stellar rally this week, but MSCI Asia-Pacific ex-Japan IT index still put on 0.5% to the highest since March 2022.

South Korea’s Hynix, the world’s second-biggest memory chipmaker which counts Nvidia as a key client, jumped 3.7% and Taiwan Semiconductor Manufacturing rallied 1%. The Global X Asia semiconductor ETF was up 1%.

“The Nvidia effect has ripped through global equity markets and given fresh wind to markets that were looking ominously poised for a 3%-5% drawdown,” said Chris Weston, head of research at Pepperstone in Melbourne.

“Consider that Nvidia holds its highly anticipated GTC [technology] conference on 18 March — where they are likely to update the market on new products and innovations — so pullbacks in the stock should be shallow, and we could see buyers push price higher into that event,” he said.

MSCI’s broadest index of Asia-Pacific shares outside Japan retreated from early gains of 0.6%, but was still up 0.2% to bring the weekly gains to 1.4%. Taiwan's stock benchmark climbed 0.6%, while South Korea gained 0.4%.

Chinese shares gave up opening gains. The Shanghai Composite index rose above the psychologically key 3,000-point mark earlier before retreating to trade flat. It is up 4.3% for the week and has bounced about 10% from five-year lows set more than two weeks ago.

Hong Kong’s Hang Seng index slipped 0.2%.

Data showed on Friday that China’s new home prices fell for the seventh month in January, keeping sentiment fragile as policymakers’ efforts to restore confidence in the debt-ridden sector were having little effect.

Shane Oliver, chief economist at AMP, said markets in general have been resilient even as global central banks pushed back against early rate cuts.

“I think the markets are sort of coming to the view well maybe we'll get the rate cuts. They may not be as much as we thought, and they might be later, but if the economic activity is still good then that's not a problem.”

A Reuters poll showed that the recent rally in global stocks has a little further to go but they were divided on whether there will be a correction in the next three months.

The influential Fed governor Christopher Waller on Thursday said policymakers should wait at least another couple more months to see if inflation is indeed heading back to target.

Rates markets continued to pare back US policy easing expectations on the back of strong US economic data. Jobless claims fell, home sales rose to a five-month high though the expansion in business activity slipped a little.

The first Fed cut is now fully priced for July, and just 80 basis points (bps) of easing is in the 2024 curve.

The cash treasuries market is closed on Friday, but overnight, the 10-year treasury yield rose to a three-month high of 4.3540%.

In the foreign exchange market, the yen was little changed at ¥150.48 to the dollar on Friday, above the critical ¥150 level that could draw possible Japanese intervention to slow the currency’s declines.

However, the yen has taken a beating against a broad range of currencies as investors bet the Bank of Japan will still keep monetary policy accommodative even after ending negative interest rates.

The Australian and kiwi dollars hit nine-year highs on the yen overnight and were last fetching ¥98.84 and ¥93.27, respectively. The euro hovered near ¥162.82, nearing a 15-year high of ¥164.30.

Oil prices fell after climbing on supply fears as hostilities in the Red Sea showed no signs of abating. A large build in US crude inventories also weighed.

Brent eased 0.4% to $83.29, while US crude slipped 0.5% to $78.24 a barrel.

The spot gold price was flat at $2,026.07.

Reuters