Asian Markets Surge Following Nvidia-Driven Wall Street Rally
Asian shares advanced on Thursday, mirroring a robust rally on Wall Street that was spearheaded by the computer chip giant Nvidia. This upward momentum in Asian markets came as U.S. futures edged lower and oil prices increased, fueled by media reports suggesting a heightened likelihood of conflict with Iran. The geopolitical tensions have intensified as U.S. President Donald Trump considers military action against Iran, with his administration bolstering military resources in the region while engaging in indirect nuclear talks with Tehran. These developments have sparked concerns that any potential attack could escalate into a broader conflict across the Middle East.
Regional Market Performance and Holiday Closures
Markets in Greater China remained closed for Lunar New Year holidays, while others resumed trading. In Tokyo, the Nikkei 225 index rose by 0.8% to reach 57,582.93. South Korea's Kospi jumped significantly by 2.8% to 5,661.22 as trading reopened after earlier holiday closures. Australia's S&P/ASX 200 advanced 0.9% to 9,088.70, and Southeast Asian markets also showed strength, with Thailand's SET index up by 0.9%. India's Sensex edged 0.1% higher, reflecting cautious optimism.
During European trading on Wednesday, London's FTSE 100 climbed 1.2%, bolstered by the latest U.K. inflation update that reinforced expectations of imminent interest rate cuts by the Bank of England. On Wall Street, the S&P 500 increased by 0.6% to 6,881.31, the Dow Jones Industrial Average added 0.3% to 49,662.66, and the Nasdaq composite gained 0.8% to 22,753.63.
Nvidia's Role and AI Market Dynamics
Nvidia played a pivotal role in lifting the market, with its stock climbing 1.6% following Meta Platforms' announcement of a long-term partnership. This deal involves Meta using millions of Nvidia's chips and other equipment for its artificial-intelligence data centers. Nvidia CEO Jensen Huang highlighted the scale of this deployment, stating, "No one deploys AI at Meta's scale." As the most valuable company on Wall Street, Nvidia's performance was the single most powerful force driving the S&P 500 higher.
This surge underscores the positive impact of AI development on the U.S. stock market. However, investors have recently focused on potential downsides, leading to sharp swings in share prices. For instance, Meta's stock initially fell by as much as 1.7% before recovering to rise 0.6%. A key concern is that if AI succeeds in creating tools to perform complex tasks more cheaply, industries such as software, legal services, and trucking logistics could face significant business undercutting. Analysts note that investors have aggressively sold stocks of companies perceived as under threat, adopting a "shoot first-ask questions later" mentality.
Corporate Earnings and Economic Indicators
Several profit reports from companies contributed to lifting stocks on Wednesday, continuing a strong reporting season for major U.S. firms in the S&P 500. Outside of earnings, Moderna jumped 6.1% after announcing that the Food and Drug Administration would review its flu vaccine candidate, following an earlier refusal to consider it.
In the bond market, Treasury yields ticked higher following better-than-expected U.S. economic reports. The yield on the 10-year Treasury rose to 4.08% from 4.05% late Tuesday. Key data included industrial production improving more than anticipated last month, orders for long-lasting manufactured goods (excluding transportation equipment) rising more in December than forecast, and homebuilders starting more new homes in December than expected. Such robust data could encourage the Federal Reserve to maintain steady interest rates.
The Fed has paused its interest rate cuts, but many on Wall Street anticipate a resumption later this year, likely during the summer after a new chair is scheduled to take over. Minutes from the Fed's last meeting revealed that many officials want to see further inflation declines before supporting additional rate cuts this year. While lower rates can boost the economy and investment prices, they risk worsening inflation.
Commodity and Cryptocurrency Movements
In early Thursday dealings, U.S. benchmark crude oil gained 30 cents to $65.36 per barrel, while Brent crude, the international standard, was up 27 cents at $70.62. Prices of gold and silver held steady. Meanwhile, the price of bitcoin fell 1.3% to approximately $67,000.
AP Business Writer Stan Choe contributed to this report.
