Asian stocks extended gains Friday, fueled by the global rally in equities that’s seen share markets from the US to Europe and Japan hit all-time highs.
Australian and South Korean shares opened higher, while a gauge of US-listed Chinese stocks climbed over 1%. Futures for Hong Kong equities slipped and Japanese markets are closed Friday for a public holiday.
The bullish mood continued on Wall Street overnight, with a buoyant outlook for Nvidia Corp., the most valuable chipmaker, helping it surge 16% amid artificial-intelligence mania, while fresh data showed the world’s largest economy is still going strong.
Nvidia’s $277 billion one-day boost to its market capitalization on Thursday was the biggest single-session increase in value ever — eclipsing a $197 billion gain made by Meta Platforms Inc. With the numbers now in, bulls are calculating Nvidia’s new price-to-earnings ratio, or how much investors are paying for future growth. Put another way, the firm’s profits have been growing faster than its shares.
“Nvidia got to where it is because of extremely strong earnings and revenue,” said James Demmert, chief investment officer at Main Street Research. “When a company posts 265% year-over-year revenue growth — like Nvidia did — it deserves a premium valuation.”
While most Asian markets are likely to end the week by following Wall Street’s lead higher, in China concern is lingering over an economic slowdown that’s starting to look entrenched. There’s no signs of a pick-up in the struggling housing market, with data published Thursday showing the number of foreclosed properties for sale in China rose at a faster pace in January.
Equities were also buoyed by solid manufacturing, housing and labor-market data, with traders taking more hawkish Fedspeak in stride. Treasury 10-year yields were little changed at 4.32% Thursday. Trading in cash Treasuries will be closed in Asia Friday due to the Japanese holiday.
“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,” Federal Reserve Governor Lisa Cook said at an event at Princeton University.
AI Computing Boom
Nvidia’s market capitalization has now increased by more than $700 billion this year — with its value now topping $1.9 trillion — as investors bet that the company will remain the prime beneficiary of an AI computing boom.
Companies such as Amazon.com Inc., Meta Platforms, Microsoft Corp. and Alphabet Inc.’s Google are Nvidia’s largest customers — accounting for nearly 40% of its revenue, — as they rush to invest in hardware for AI computing.
“Demand for AI is surging worldwide across companies, industries and nations,” said Tom Hulick at Strategy Asset Managers. “We own NVDA and continue to hold the company. This is an exciting momentum play that we have been promoting and participating with for a few years now.”
The tech rally has propelled the valuation of the Nasdaq 100 to an elevated level versus history, with a similar picture for the S&P 500. Lofty valuations could ultimately curb more gains as investors weigh how much they’re willing to pay for stocks valued on future growth.
Still, Citigroup Inc. strategist Scott Chronert said recently that index price-to-earnings readings could be misleading because 40% of the S&P 500 trades off other metrics. He predicted that more stocks could re-rate even with the US benchmark trading at 20 times forward earnings — which is exactly what followed.
In commodities, oil steadied in Asia as investors weighed signs of a tightening market against persistent concerns around demand. Elsewhere, gold fluctuated after the US economic data and Fed minutes which indicated policymakers are content with leaving rates higher for longer if needed.
Key Events This Week:
- 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 were little changed as of 9:06 a.m. Tokyo time
- Hang Seng futures fell 0.6%
- Australia’s S&P/ASX 200 rose 0.5%
- Euro Stoxx 50 futures rose 1.7%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0826
- The Japanese yen was little changed at 150.46 per dollar
- The offshore yuan was unchanged at 7.2021 per dollar
- The Australian dollar was little changed at $0.6561
Cryptocurrencies
- Bitcoin fell 0.7% to $51,282.83
- Ether fell 0.5% to $2,970.75
Bonds
- Australia’s 10-year yield was little changed at 4.16%
Commodities
- West Texas Intermediate crude fell 0.4% to $78.26 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Rita Nazareth.
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Source: Reuters
