Asian Stocks Rise as Chip Selloff Eases, Oil Slips: Markets Wrap
(Bloomberg) — Asian equities rose as dip buyers stepped in following a chip-stock selloff fueled by concerns about the artificial intelligence trade. Crude oil edged lower.
MSCI Inc.’s Asia Pacific equities gauge climbed 1%, with five shares advancing for every one that declined. Samsung Electronics Co. and SK Hynix Inc. gained in Seoul, helping South Korea’s Kospi Index rise almost 3% after slumping on Thursday to its lowest level since April.
Still, caution prevailed as futures contracts for US benchmarks edged lower in early Asian trading, with Nasdaq 100 futures down 0.3%. Taiwan Semiconductor Manufacturing Co.’s stock edged lower in early trading after its upbeat outlook failed to quell concerns about the AI buildout.
Treasuries broadly held gains after rallying Thursday on haven demand driven by this week’s sharp swings in global stocks and credit markets. Traders awaited comments from Federal Reserve Chair Kevin Warsh, who was set to join IMF Managing Director Kristalina Georgieva for a fireside chat in Bangkok.
Indonesian stocks will be in focus after the country faced a potential ejection from global stock indexes. Traders will also monitor Chinese markets with the European Union preparing to create new trade powers that could completely shut off access to its single market as part of a dramatic new push to cut the trade deficit with China.
The durability of the rebound may depend on whether gains spread beyond the technology heavyweights that have driven much of this year’s advance. A broader participation across sectors would help reduce the market’s reliance on AI-linked stocks after this week’s sharp swings exposed the risks of that concentration.
“After a strong run in AI stocks the past few months, value shares got way too cheap, while tech got quite expensive amid the artificial-intelligence frenzy,” said Brian Frank, president and portfolio manager at Frank Funds. “We’re still looking for companies that have good credit and trade at discounts in case growth or consumer spending ebbs on sticky inflation.”
What Bloomberg’s Strategists Say…
“US equity index futures are fading in early Friday trading, with Nasdaq 100 contracts leading the moves with a ~0.5% decline. That underscores the concern that Fed Chairman Warsh may keep the door open to an October interest-rate hike when he speaks later on in Bangkok, at a time when the AI trade has lost its former nonchalance about higher borrowing costs.”
— Garfield Reynolds, Markets Live team leader. For more on the analysis, click here.
There were already signs of a broader shift on Wall Street. An equal-weighted version of the S&P 500 Index climbed 1.4%, with healthcare and consumer-staples shares leading gains.
The pressure on chip stocks eased after Nvidia Corp. Chief Executive Officer Jensen Huang defended the financial health of AI computing supplier CoreWeave Inc.
“CoreWeave’s strength is improving every day,” Huang said. “I’m optimistic. Their cost of capital is actually decreasing.”
A measure of the company’s credit risk climbed to an all-time high Thursday as some of its high-yield bonds extended declines.
Elsewhere, a Bloomberg gauge of the dollar held Thursday’s losses, when it posted its biggest decline in more than a month. Gold fell 0.4%, paring some of the previous session’s gains to trade around $4,155 an ounce.
Global crude oil benchmark Brent fell 0.6% to about $105.30 a barrel. Still, the commodity was set for a second weekly advance as increasing Middle East supply risks weighed against a fresh release of emergency reserves.
Meanwhile, questions over the durability of the AI investment boom are spilling into credit markets as investors scrutinize the debt financing the infrastructure buildout.
On Warsh, traders will look for clues on whether Fed officials are leaning toward another rate increase. Last month, Fed officials lifted borrowing costs for the first time since 2023 and futures now imply about a 25% chance of a rate hike in October.
A dovish shift by the Fed “would be a major risk” to Treasuries, Makoto Noji, chief currency and foreign bond strategist at SMBC Nikko Securities Inc. in Tokyo, wrote in a research note. “If signs emerge that the Fed is becoming more reluctant to raise rates further this year, long-term US yields could rise again on a ‘behind-the-curve’ trade.”
Corporate Highlights:
Three CoreWeave Inc. co-founders have sold $3.3 billion in company shares since last year’s initial public offering. Meta Platforms Inc. made one of its new AI models available for developers to download and modify, while keeping its most advanced technology closed in an effort to convert its AI investments into revenue. Super Micro Computer Inc. has appointed Mark Long as chief financial officer, saying it aims to grow more quickly in the AI era. Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 10:03 a.m. Tokyo time Hang Seng futures rose 0.9% Japan’s Topix rose 1.7% Australia’s S&P/ASX 200 rose 0.9% Euro Stoxx 50 futures rose 0.4% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1214 The Japanese yen was little changed at 158.15 per dollar The offshore yuan was little changed at 6.6908 per dollar The Australian dollar was little changed at $0.6923 Cryptocurrencies
Bitcoin rose 0.3% to $82,233.09 Ether fell 0.5% to $2,439.35 Bonds
The yield on 10-year Treasuries advanced three basis points to 5.09% Japan’s 10-year yield advanced 3.5 basis points to 2.925% Australia’s 10-year yield advanced two basis points to 5.23% Commodities
West Texas Intermediate crude fell 0.7% to $97.32 a barrel Spot gold fell 0.4% to $4,156.29 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Masaki Kondo.
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