Record Stock Rally Extends, OpenAI Lifts Asia Tech: Markets Wrap

(Bloomberg) — A record-breaking global stock rally stretched into Asia, with equities advancing after OpenAI’s agreement with South Korean chipmakers reinforced enthusiasm for artificial intelligence.

Asian shares rose 1.1%, trading above a record close reached last month, with chip-related stocks leading the charge. Samsung Electronics Co. gained 4.3% and SK Hynix Inc. jumped 10% after OpenAI tapped the companies for chips. That sent South Korean shares to an all-time high. Earlier, the S&P 500, Nasdaq 100 and MSCI’s gauge of global stocks all hit a new peak. Equity-index futures for the US and Europe indicated further gains.

OpenAI also completed a share sale at a record $500 billion valuation, vaulting the ChatGPT-maker as the world’s most valuable startup.

The artificial intelligence boom and billions in corporate investment have fueled the stock rally to record highs after April’s slump. Investors have also shrugged off the political impasse in Washington that has led to the first government shutdown in seven years and threatens to obstruct crucial economic data the Federal Reserve needs for its interest-rate decisions.

“Tech stocks continue to defy gravity,” Peter Kim, managing director at KB Securities, said in a Bloomberg TV interview. “I don’t see significant headwinds against Asian tech, possibly extending into next year.”

In other corners of the market, Treasuries held their gains, spurred by private payrolls data that reinforced bets the Fed will lower rates this month. The dollar was flat and gold steadied following a five-day rally that saw it reach successive records. Japanese 10-year government bonds edged lower after the second poorly received auction this week.

OpenAI’s Sam Altman signed a letter of intent Wednesday to enlist the two South Korean firms in his data center construction effort, a global undertaking that involves the sector’s biggest players from Nvidia Corp. to Oracle Corp.

OpenAI and Nvidia are helping lead a global push to build data centers for a new generation of AI tools — an effort that’s expected to cost trillions of dollars and require chips, servers, cooling systems and copious amounts of electricity. Altman was due in Taipei next, where he’s slated to meet with AI linchpins Taiwan Semiconductor Manufacturing Co. and Hon Hai Precision Industry Co., local media reported.

“Sam Altman’s OpenAI Stargate deal with the Korean companies further reinforces the strong structural backdrop of robust AI demand in the coming years,” said Vey-Sern Ling, senior equity adviser for Asia technology at Union Bancaire Privee.

What Bloomberg strategists say…

Hong Kong equities have further to climb in this cycle amid a steady stream of AI drivers. There is also the read across from a surging Kospi index which is jumping to the Samsung-Hynix beat.

— Mark Cranfield, Markets Live strategist. Click here for full analysis.

Meanwhile, an ADP Research report Wednesday showed payrolls at US companies had unexpectedly dropped in September, consistent with other data over the past month indicating a slowing labor market. That prompted traders to add to bets on two more Fed rate cuts this year.

“The market is going to have to focus on independent private sources to get a sense of what’s going on,” said Wellington Management portfolio manager Brij Khurana.

The JOLTS report on Tuesday had signaled that demand for workers is slowing, giving traders a snapshot of the labor market at a time the Bureau of Labor Statistics’ nonfarm payrolls data will likely be delayed.

Investors analyzing the impact of previous shutdowns have determined that such events don’t last long and often have a negligible macroeconomic impact. At a White House press conference on Wednesday, Vice President JD Vance said he doesn’t anticipate a long shutdown, adding that layoffs will come if it lasts for days or weeks.

“What sets this shutdown apart is the threat of permanent layoffs for non-essential federal staff,” Thomas Ryan, North America economist at Capital Economics, wrote in a note.

Corporate News:

Samsung Electronics Co. and SK Hynix Inc. have forged initial agreements to supply chips and other gear to OpenAI’s Stargate project. Intel Corp. shares climbed after Semafor reported that the company is in talks to add Advanced Micro Devices Inc. as a customer for its manufacturing business. Siemens AG is exploring the spinoff of a large part of its majority stake in Frankfurt-listed medical equipment unit Siemens Healthineers AG in a relatively untested structure. Renault SA and China’s Chery Automobile Co. are in talks to partner on carmaking and sales in South America. Some of the main moves in markets:

Stocks

S&P 500 futures rose 0.1% as of 6:51 a.m. London time Nasdaq 100 futures rose 0.2% The MSCI Asia Pacific Index rose 1.1% Japan’s Topix rose 0.1% Australia’s S&P/ASX 200 rose 1.2% Hong Kong’s Hang Seng rose 1.6% Euro Stoxx 50 futures rose 0.5% Currencies

The Bloomberg Dollar Spot Index was unchanged The euro was little changed at $1.1735 The Japanese yen was little changed at 147.17 per dollar The offshore yuan was little changed at 7.1323 per dollar The British pound was little changed at $1.3477 Cryptocurrencies

Bitcoin rose 0.7% to $118,452.4 Ether rose 1.2% to $4,386.92 Bonds

The yield on 10-year Treasuries was little changed at 4.11% Japan’s 10-year yield advanced one basis point to 1.660% Australia’s 10-year yield declined three basis points to 4.34% Commodities

Spot gold was little changed West Texas Intermediate crude rose 0.5% to $62.11 a barrel This story was produced with the assistance of Bloomberg Automation.

–With assistance from Winnie Hsu.

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