Asian Stocks Rise as Global Equities Hit All-Time Highs
Asian stocks experienced a second consecutive day of gains on Friday, following the global rally in equities that has seen markets across the US, Europe, and Japan reach all-time highs. China’s benchmark index CSI 300 extended its gains for a ninth session, while Hong Kong shares remained steady. Australian, Taiwanese, and South Korean equities also advanced. However, Japanese markets were closed for a public holiday. S&P futures hovered near all-time highs around 5,100, reflecting the powerful tech rally on Thursday, while European contracts were also up.
The bullish mood in Asia was influenced by the gains in the US overnight. The S&P 500 and Nasdaq 100 indexes, along with MSCI’s all-country index, closed at new records. A significant factor in this rally was the positive outlook for Nvidia Corp., the most valuable chipmaker, which surged 16% due to artificial intelligence mania. Additionally, fresh data indicated that the world’s largest economy is still performing strongly.
Nvidia’s remarkable $277 billion one-day boost to its market capitalization on Thursday surpassed Meta Platforms Inc.’s recent $197 billion gain, making it the biggest single-session increase in value ever. Quincy Krosby, chief global strategist for LPL Financial, commented on Nvidia’s performance, stating, “The major catalyst for markets, absent rate cuts throughout the year, would by necessity be earnings, and here Nvidia wowed investors and traders alike. It was clear from their top down, and straight to the bottom line, that demand for AI infrastructure is growing exponentially.”
In Hong Kong, the Hang Seng Mainland Properties Index experienced a fourth consecutive day of gains, signaling the first signs of improvement in the country’s property sector in 10 months. Data released on Friday revealed that China’s home prices declined at a slower pace for both new and existing units in January. However, markets were also analyzing indications that China’s economic slowdown is becoming entrenched, as the number of foreclosed properties for sale in China rose at a faster pace in January.
Garry Evans, BCA Research’s chief strategist for global asset allocation, expressed his views on the Chinese stock market, stating, “The Chinese authorities can’t live with the stock market as weak as this, but it is really only a trading rebound I think. At the moment, China’s economy still looks very weak.”
Meanwhile, traders in the US responded calmly to more hawkish Federal Reserve commentary. Treasury 10-year yields remained relatively unchanged at 4.32% on Thursday. Trading in cash Treasuries was closed in Asia on Friday due to the Japanese holiday.
Nvidia’s market capitalization has increased by over $700 billion this year, surpassing $1.9 trillion in value. Investors are betting that the company will continue to benefit from the AI computing boom. However, the tech rally has led to elevated valuations for the Nasdaq 100 and S&P 500, which could potentially limit further gains as investors consider how much they are willing to pay for stocks based on future growth.
In commodities, oil prices slipped as investors weighed signs of a tightening market against persistent concerns about demand. Gold prices fluctuated following US economic data and Federal Reserve minutes that indicated policymakers are content with leaving rates higher for longer if necessary.
In corporate news, Standard Chartered Plc announced a $1 billion share buyback along with fourth-quarter earnings that exceeded analyst estimates.
Overall, Asian stocks are benefiting from the global rally in equities, with markets reaching all-time highs across the US, Europe, and Japan. The positive performance of Nvidia and the continued strength of the US economy have contributed to this bullish sentiment. However, concerns remain about China’s economic slowdown and the potential impact on its stock market. Investors will closely monitor future earnings and valuations as they assess the sustainability of further gains.