Tech optimism lifts stocks ahead of Fed update on rates
Share prices of technology firms surged Wednesday in Asia after blockbuster earnings from the South Korean chip giant SK hynix boosted optimism in the AI trade ahead of results from Wall Street titans Microsoft and Alphabet.
Investors also awaited the US Federal Reserve’s decision on interest rates and the accompanying statements for indications of a potential increase next month to cool inflation in the world’s biggest economy.
Oil prices meanwhile rose more than one percent, with the main international contract, Brent North Sea crude, remaining above $115 a barrel amid worries of renewed fighting between the United States and Iran.
Wall Street opened higher, with the tech-heavy Nasdaq Composite rising 0.3 percent as trading got underway in New York.
European stock markets reversed earlier losses, with London adding 0.2 percent in afternoon trading as the Labour government under Prime Minister Andy Burnham unveiled its first budget.
“For now, the rally in tech stocks is impervious to the rising oil price and the risks posed by political elections across the world, budgets and the Federal Reserve meeting this evening,” said Kathleen Brooks, research director at the trading group XTB.
Trade Nation analyst David Morrison noted that “the tech sector rebound continued this morning, with the Nasdaq now making back all of its losses from this time last week” when investors took fright at Meta’s plans to scale up AI infrastructure spending further.
Investors were also awaiting the final outcome of Israel’s general election, after Brazil’s currency and stock market plunged following the surprise re-election of leftist President Luiz Inacio Lula da Silva.
But most of the focus was on the Fed, which “is set to hold rates steady but could signal the path to more hikes” that could weigh on corporate profits and growth, said Neil Wilson, investor strategist at Saxo UK.
Also coming up on Thursday are earnings results from Amazon, Apple and Intel, which could shape investor optimism on artificial intelligence amid the huge spending in the sector.
After a slight wobble this month caused by fresh worries about the massive investments, potential profitability and debt levels, AI-linked firms were back in demand.
SK hynix, which has been at the forefront of the chip boom, revealed Wednesday that its third-quarter operating profit soared 632 percent to $62.8 billion thanks to explosive demand for its advanced semiconductors.
The report added to optimism surrounding the sector after Anthropic, the creator of Claude AI, said Monday that its first-half revenue surged about 1,300 percent and flagged heavy capital spending ahead, fuelling enthusiasm ahead of an expected IPO next month.
That was followed Tuesday by Broadcom’s deal with Citi, Blackstone and Morgan Stanley to form a $63 billion financing structure to build new computing capacity for Anthropic.
Shares in SK hynix soared almost 11 percent Wednesday and its hometown rival Samsung, which reports its earnings Thursday, added nine percent.
That pushed Seoul’s Kospi index up more than six percent.
In Japan, the chipmaker Kioxia saw its shares jump nearly 14 percent, helping the Nikkei 225 to advance more than one percent.
On Wall Street, AI processor giant Nvidia added 0.6 percent, AMD rose 2.0 percent and Micron Technologies climbed 5.1 percent.
New York – Dow: UP less than 0.1 percent at 52,397.18 points
New York – S&P 500: UP 0.2 percent at 7,737.86
New York – Nasdaq Composite: UP 0.3 26,593.81
London – FTSE 100: UP 0.2 percent at 10,704.71
Paris – CAC 40: UP 0.2 percent at 7,737.86
Frankfurt – DAX: UP 0.5 percent at 26,553.81
Tokyo – Nikkei 225: UP 1.1 percent at 63,954.19 (close)
Seoul – Kospi: UP 6.6 percent at 6,012.44 (close)
Hong Kong – Hang Seng Index: UP 0.2 percent at 23,094.83 (close)
Shanghai – Composite: UP 0.9 percent at 3,681.47 (close)
Brent North Sea crude: UP 1.2 percent at $115.23 per barrel
West Texas Intermediate: UP 1.9 percent at $101.76 per barrel
Euro/dollar: DOWN at $1.1134 from $1.1138 on Tuesday
Pound/dollar: DOWN at $1.3292 from $1.3316
Dollar/yen: DOWN at 157.99 yen from 157.90 yen
Euro/pound: UP at 83.78 pence from 83.64 pence