(Nov 10) : Asian stocks were poised to track Wall Street higher as a rally in technology shares and a slump in oil prices drove US benchmarks to their best day in seven months.
Equity-index futures for South Korea, Japan and Taiwan, home to leading suppliers of the hardware for the artificial intelligence buildout, pointed to gains of at least 2%. Those for Australia indicated more modest advances.
The S&P 500 rose 2.3%, the most since April 8, while a near 7% surge in a gauge of chipmakers pushed the Nasdaq 100 3.4% higher. That came despite a 4.3% slump in Nvidia Corp. amid a probe into Chief Executive Officer Jensen Huang after his admission of an affair with a woman identified in a series of reports as a suspected Chinese spy.
Elsewhere, Brent crude slumped almost 6% to settle below US$93 a barrel after President Donald Trump struck a more conciliatory tone on Iran, saying it’s “highly unlikely” he will order extensive strikes on the Islamic Republic. Despite lower energy costs, Treasury yields edged higher as the stock rally damped the appeal of bonds as a hedge. A gauge of the dollar fell for the first time in three sessions.
The stock rally follows a tumultuous week during which chipmakers sold off on concerns that the Democratic sweep of US Congress in the midterms would spur tighter regulation of the artificial intelligence industry. At the same time, a steady decline in oil prices amid speculation about efforts to end the Middle East conflict has helped temper inflation fears.
“We continue to see economic conditions as supportive of corporate fundamentals,” said Brock Weimer at Edward Jones. “Thus, we recommend that investors maintain an overweight allocation to equities relative to fixed income.”
The recent tech selloff represented a reset rather than the start of a structural downturn in the AI investment cycle. But the rebound does not remove the risks created by concentrated positioning and elevated expectations, said Ulrike Hoffmann-Burchardi at UBS Chief Investment Office.
While it’s unlikely last week shut the door on volatility, what unfolded may have been more about investors repositioning within the AI trade rather than abandoning it altogether, noted Chris Larkin at E*Trade from Morgan Stanley.
“There’s good reason to believe the stock market’s long-term rally is intact, especially given that the selloff overshadowed another week of strong economic data,” he added.
On the economic front, investors will be watching October US consumer prices data, which is slated to be released Tuesday and is expected to show smaller increases than in September. Expectations for future inflation have moderated with oil prices this month, as measured by breakeven rates for Treasury Inflation-Protected Securities.
uploaded by Isabelle Francis