Asian equities and US stock futures rose Thursday after Nvidia Corp.’s robust sales forecast provided fresh momentum for a rally in risk assets.
Japanese stocks rallied, with the Nikkei 225 Index topping a record intraday peak reached in 1989, driven by gains in technology shares and chip-gear producers. South Korea equities rose, while Chinese benchmarks climbed. The moves lifted a gauge of Asian shares to its highest level in almost two years.
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“After some recent consolidation, Nvidia’s earnings beat is just the perfect catalyst for Japanese equities to reach record highs,” said Charu Chanana, strategist at Saxo Capital Markets. “Structural tailwinds from geopolitics to corporate reform, as well as a weak yen, continue to suggest that Japanese equities is a story where macro meets momentum and a peak is still rather far,” she said.
Gains in US contracts during Asian hours were spurred on by Nvidia results. The tech company’s shares soared as much as 11% in post-market trade after it said first-quarter revenue would likely hit $24 billion, above prior estimates of around $22 billion.
The results were expected to provide a catalyst for global equities, and delivered on the promise. Nvidia’s Asia-based suppliers SK Hynix Inc and Advantest Corp climbed as did a region-wide index of semiconductor companies.
“As goes Nvidia, so goes the market,” said Kim Forrest, chief investment officer of Bokeh Capital Partners LLC. “And it looks like the results are good enough. It does confirm the narrative that AI is going to continue to be strong for the foreseeable future. This narrative supported the markets last year, why wouldn’t it do the same this year?”
Shares in mainland China are heading for their longest stretch of gains since 2020 after the raft of recent measures undertaken by authorities to stabilize the market and prop up investor sentiment.
Still, the CSI 300 and Hang Seng Index trailed most Asian peers even as the securities regulator tightened its grip on the market following an order banning major institutional investors from reducing equity holdings at the open and close of each trading day, according to people familiar with the matter.
“Things are still not that rosy,” said Xiaojia Zhi, chief China economist for Credit Agricole, speaking on Bloomberg Television. “Deflationary pressures are likely to continue for the rest of the year even though it will be less prominent compared to last year.”
Asian investors rediscovered their optimism seen toward the end of 2023 as they look set to overcome January’s losses, boosted by recovery in China and gains in Japan. Expectations of improvement in technology earnings led by chipmakers in the region has also added to the appeal of the region’s stocks.
An electric stock board at the Tokyo Stock Exchange (TSE) on February 22. Image: Soichiro Koriyama/Bloomberg
The dollar was weaker Thursday as it slipped against Group-of-10 currencies. The yen was largely unchanged at around 150 per dollar. The won pared its gains after comments from Bank of Korea’s Governor Rhee Chang-yong following the central bank’s decision to leave key interest rate unchanged.
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Treasuries steadied in Asia after selling off Wednesday pushing the 10-year yield five basis points higher. The selling pressure was seen across the curve, and followed a $16 billion sale of 20-year bonds and the release of Federal Reserve meeting minutes that revealed caution about cutting rates. Australian and New Zealand bonds were steady.
Richmond Fed chief Thomas Barkin highlighted persistent pricing pressures in sectors such as housing even though headline inflation is falling. Fed Governor Michelle Bowman, meanwhile, pushed back against the prospect of imminent cuts.
Elsewhere, Qantas Airways Ltd said first-half profit declined as airfares fell from their post-Covid spike as it delivered a A$1.25 billion underlying first-half, pre-tax profit, down from a year earlier, but less than analysts expected. United Overseas Bank Ltd.’s fourth-quarter profit expanded, powered by stronger fee income from wealth and credit cards.
Later Thursday economic data set for release includes Eurozone inflation and PMIs, as well as US initial jobless claims and home sales.
West Texas Intermediate crude oil added to a 1.1% gain on Wednesday, supported by tightening physical supplies. Gold was steady at around $2,027 per ounce. Bitcoin steadied after a drop Wednesday to trade around $51,250.
Key Events This Week:
- Eurozone S&P Global Services PMI, S&P Global Manufacturing PMI, CPI, Thursday
- US initial jobless claims, US existing home sales, Thursday
- ECB issues account of January meeting, Thursday
- Fed Governor Lisa Cook and Minneapolis Fed President Neel Kashkari speak, Thursday
- China property prices, Friday
- Germany IFO business climate, GDP, Friday
- ECB publishes 1- and 3-Year inflation expectations survey, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.7% as of 12:29 p.m. Tokyo time
- Nasdaq 100 futures rose 1.4%
- Japan’s Topix rose 1.1%
- Australia’s S&P/ASX 200 was little changed
- Hong Kong’s Hang Seng rose 0.2%
- The Shanghai Composite rose 0.5%
- Euro Stoxx 50 futures rose 0.7%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0825
- The Japanese yen was little changed at 150.38 per dollar
- The offshore yuan was little changed at 7.2010 per dollar
Cryptocurrencies
- Bitcoin rose 0.3% to $51 543.55
- Ether rose 0.1% to $2,930.82
Bonds
- The yield on 10-year Treasuries declined two basis points to 4.30%
- Australia’s 10-year yield declined two basis points to 4.15%
Commodities
- West Texas Intermediate crude rose 0.3% to $78.12 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
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