Asian Stocks Poised to Track Tech-Fueled US Gains: Markets Wrap

(Bloomberg) — Stocks in Asia look set for a positive open after Advanced Micro Devices Inc.’s blockbuster deal with OpenAI helped fuel a rally in chipmakers that sent US shares to an all-time high.

Equity-index futures indicated gains for Tokyo, while shares opened lower in Sydney. The S&P 500 climbed for a seventh session — the longest advance since May — after AMD soared 24% following the deal to build artificial intelligence infrastructure. The dollar rose, while the yen held its biggest drop in almost five months. Gold pushed closer to $4,000 an ounce. Oil held Monday’s gain.

US equity-index futures held their losses after President Donald Trump called on the Democrats to reopen the government before there can be talks on healthcare.

Monday’s AMD deal is the latest big-budget data center agreement this year. It follows last month’s announcement that Nvidia Corp. was planning to invest as much as $100 billion in OpenAI amid demand for tools like ChatGPT and the computing power needed to make them run.

“Semiconductors are ‘on fire’,” said Louis Navellier at Navellier & Associates. “The AI narrative continues to gain momentum.”

With “animal spirits” surrounding the AI phenomenon getting yet another boost, Matt Maley at Miller Tabak said it’s no surprise that issues like the US government shutdown are being mostly ignored by traders.

Still, for almost as long as the artificial intelligence boom has been in full swing, there have also been warnings of a speculative bubble that could rival the dot-com craze of the late 1990s.

Tech firms are spending hundreds of billions of dollars on advanced chips and data centers, and the final bill may run into the trillions. The financing is coming from venture capital, debt and, lately, some more unconventional arrangements that have raised eyebrows on Wall Street.

It’s possible that some level of investment in the AI buildout today may not yield the degree of return investors hope for, and valuations among some of the leaders would likely need to be adjusted downward, said Anthony Saglimbene at Ameriprise.

“However, given the size and scale of companies and industries that have yet to tap into AI in a meaningful way, we are less concerned that we are on the cusp of a dot-com bubble just yet,” he said.

Long-term Treasuries underperformed, joining a similar trend through much of Europe and Asia amid fiscal concerns. Australia’s 10-year yield climbed five basis points early Tuesday.

Japanese stocks surged on Monday, with the Nikkei 225 Stock Average closing 4.8% higher at a fresh record amid hopes of more fiscal spending. Options traders are the least bullish on the yen in more than three years after pro-stimulus lawmaker Sanae Takaichi’s near-certain ascent to become the next prime minister.

The yen slid past 150 a dollar and sank to an all-time low against the euro, while longer-term bonds fell on concern her policies will require more government spending and fan inflation.

In the US, companies are set to enjoy a better-than-expected earnings season as a robust economy and a solid outlook for AI have left estimates looking too low, according to Goldman Sachs Group Inc. strategists led by David Kostin. They also expect the so-called Magnificent Seven group of tech heavyweights to beat expectations.

Some of the main moves in markets:

Stocks

S&P 500 futures fell 0.1% as of 8:21 a.m. Tokyo time Australia’s S&P/ASX 200 fell 0.2% Currencies

The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1709 The Japanese yen was little changed at 150.37 per dollar The offshore yuan was little changed at 7.1432 per dollar Cryptocurrencies

Bitcoin fell 0.3% to $124,843.56 Ether rose 0.1% to $4,696.85 Bonds

Australia’s 10-year yield advanced six basis points to 4.39% Commodities

West Texas Intermediate crude was little changed Spot gold rose 0.1% to $3,966.86 an ounce This story was produced with the assistance of Bloomberg Automation.

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