Asian stock markets experienced substantial gains on Monday, primarily driven by a resurgence in technology shares as investor confidence rebounded following last week’s market fluctuations tied to artificial intelligence-related stocks. South Korea’s Kospi index led the rally with a remarkable jump of 3.5%. Notably, SK Hynix, a major player in the semiconductor industry collaborating with Nvidia on AI technologies, saw its shares soar by 5.5%. Its larger competitor, Samsung Electronics, also benefitted, recording a rise of 2.4%.
In Japan, Tokyo’s Nikkei 225 index rose by 1.2%, closing at 50,897.20, bolstered by significant gains in AI-related companies, including a 4.7% increase for chip manufacturer Tokyo Electron. Hong Kong’s Hang Seng index climbed 0.8% to reach 26,445.65, while the Shanghai Composite index remained relatively stable, barely changing at 2,630.42. In Australia, the S&P/ASX 200 index gained 0.7%, closing at 8,826.50. Taiwan’s Taiex index recorded a 1.2% increase, and India’s Sensex gained 0.5%.
The Asian market’s optimism contrasts sharply with the mixed performance seen on Wall Street last Friday, which marked the first weekly loss in four weeks. The S&P 500 index managed a slight increase of 0.1%, closing at 6,728.80. The Dow Jones Industrial Average also recorded a modest gain of 0.2%, reaching 46,987.10. However, the tech-heavy Nasdaq composite experienced a decline of 2.1% at one point but ultimately shed just 0.2% to close at 23,004.54. This volatility was largely attributed to fluctuations in major tech stocks that dominate market direction, including a 2.1% drop for Alphabet, Google’s parent company, and a 1.7% decrease for Broadcom.
Currently, Wall Street is closely monitoring upcoming quarterly earnings reports from U.S. businesses. One notable disappointment came from Block, the payments company behind Square and Cash App, which saw its stock plummet by 7.7% after reporting results below expectations. In contrast, Peloton’s stock surged by 14.2% following an earnings report that exceeded estimates, and Expedia Group’s shares jumped 17.5% after also beating analysts’ quarterly earnings forecasts.
More than 90% of companies within the S&P 500 have released earnings reports for the most recent quarter, with most reporting growth that surpassed Wall Street’s expectations. The technology sector is leading this growth. These corporate earnings reports take on heightened significance following delays in crucial economic data due to the ongoing U.S. government shutdown, now the longest on record. This shutdown has resulted in postponed reports on inflation and employment, metrics vital for traders and the Federal Reserve’s decision-making process.
The absence of employment data is particularly concerning as the job market shows signs of weakening. In response, the Federal Reserve has adopted a more cautious stance regarding anticipated interest rate cuts, aimed to stimulate the economy by making borrowing cheaper. This year, the Fed has already cut its benchmark rate twice, attempting to mitigate the potential negative impacts of a declining employment landscape on economic growth. However, further rate cuts could exacerbate existing inflation issues, which remain persistently above the central bank’s 2% target.
Market sentiment leans towards the expectation that the Fed will cut interest rates during its December meeting. In commodities trading, U.S. benchmark crude oil prices rose by 54 cents to $60.29 per barrel, while Brent crude, the international benchmark, saw an increase of 49 cents, reaching $64.12 per barrel. The U.S. dollar also appreciated against the yen, rising to 153.94 from 153.72 yen, and the euro inched up to $1.1564 from $1.1562.
