Japan's Nikkei 225 index topped 68,000 for the first time on Wednesday, following a surge in U.S. stocks to record levels. The dollar briefly surpassed 160 Japanese yen before slipping back slightly, while oil prices rose more than $1 a barrel. The rally was fueled by buying of technology shares linked to the artificial intelligence boom.
Nikkei 225 Surges on AI Optimism
By midmorning, the Nikkei 225 was up 2.2% at 68,172.89. Shares in computer chip equipment maker Tokyo Electron gained 10.1%, while those for chip testing equipment maker Advantest rose 4.6%. In Hong Kong, the Hang Seng lost 0.9% to 25,804.51, and the Shanghai Composite index slipped 0.2% to 4,068.77. Australia's S&P/ASX 200 added 0.3% to 8,747.10, and Taiwan's Taiex climbed 1.8%. Markets in South Korea were closed for a holiday.
Wall Street Hits New Milestones
On Tuesday, winners of the artificial-intelligence boom pushed U.S. stocks to more records. The S&P 500 rose 0.1% to 7,609.78, the Dow Jones Industrial Average added 0.4% to 51,307.79, and the Nasdaq composite edged up by less than 0.1% to 27,093.90. All three set all-time highs. A report showed that U.S. employers advertised more jobs at the end of April than economists expected, signaling continued labor market health.
Hewlett Packard Enterprise's stock soared 19.5% after reporting a profit that beat analysts' expectations, citing demand from customers building AI capabilities. Marvell Technology leaped 32.5% for its best day since 2000 after Nvidia's CEO suggested Marvell could be the next trillion-dollar company. Nvidia itself slipped 0.7%, but its total value has topped $5 trillion. Generac climbed 5.7% after signing a deal to provide backup power generators to a leading hyperscale data center operator.
AI Investments Under Scrutiny
Hyperscalers are spending vast sums to build AI data centers, powering what proponents believe is the next great economic revolution. Alphabet, parent company of Google, announced it is raising $80 billion by selling shares to fund investments, losing 3.9% on Tuesday. The company plans to spend up to $190 billion on equipment and other investments this year, more than the entire market value of Walt Disney Co., and forecasts spending will significantly increase next year. Such huge sums raise questions about whether AI can deliver the profits and productivity to justify the investment or if a bubble is forming.
Analysts suggest the broad U.S. stock market may slow after nine straight winning weeks for the S&P 500, its longest streak since 2023. The rally has been supported by strong profit reports and hopes for a U.S.-Iran deal to reopen the Strait of Hormuz, which would lower oil prices.
Oil Prices Climb
Oil prices resumed climbing on Wednesday. Brent crude oil rose $1.03 to $97.03 per barrel, while U.S. benchmark crude advanced $1.10 to $94.86 per barrel. Both remain well above pre-war levels. The U.S. dollar slipped to 159.86 yen from 159.92 late Tuesday, after briefly trading at 160.44 yen. The euro fell to $1.1631 from $1.1632.
