Asian stocks rallied Tuesday to extend a Wall Street surge led by technology firms as investors took advantage of lower prices following last week’s rout, while another plunge in oil prices added to the upbeat mood.
AI-linked firms led gains across the region, in stark contrast to the battering in reaction to last Tuesday’s Democratic sweep of Congress that stoked regulatory concerns.
However, traders remain on edge about profitability in light of the vast sums pumped into the sector, while they were also keeping tabs on Nvidia after boss Jensen Huang’s admission of an affair amid speculation of a Chinese espionage plot.
Titans including Amazon, Microsoft and Apple were among the big gainers Monday in New York as tech bounced back with help from bargain-hunting, with observers pointing out that confidence in the AI outlook remained solid.
The Nasdaq’s 2.7 percent spike led a strong day on Wall Street, and Asian investors took up the baton.
Seoul surged more than five percent at one point thanks to similar advances for chipmakers SK hynix and Samsung, while Tokyo jumped almost three percent on the back of strong performances by Kioxia, SoftBank and Tokyo Electron.
Taiwan’s TSMC rallied more than one percent and MediaTek more than seven percent to drag the Taiex 3.5 percent higher.
Hong Kong, Shanghai, Sydney, Singapore, Manila and Wellington were also higher.
However, SPI Asset Management’s Stephen Innes said the gains did not suggest markets were back in rude health.
“The market rallied because the sellers stepped away, not because the entire buy-side suddenly rediscovered its courage,” he wrote in a commentary.
“For the second consecutive session, the companies receiving the enormous capital expenditure cheques dramatically outperformed the businesses writing them. That is a potentially important development after last week’s indiscriminate liquidation,” he said.
– ‘Positive momentum’ –
“The hyperscalers remain central to the AI investment cycle, but the market is increasingly questioning the returns on the extraordinary sums being committed to new infrastructure.
“Equipment providers, optical networking companies and selected data-centre suppliers can still benefit from existing spending programmes, even as investors become more selective about the ultimate economics for the companies funding those projects.”
Oil prices continued their retreat on hopes the US and Iran will eventually bring an end to the Middle East crisis.
Both main contracts fell around one percent Tuesday, extending the previous day’s drop that saw Brent give up almost six percent.
