Asian Equities Poised for Best February on Record: Markets Wrap

(Bloomberg) — Asian stocks were on track for their best February on record as investors piled into the region’s companies supplying the artificial intelligence infrastructure build-out.

Even after slipping 0.4% at the start of the last trading day of month, the MSCI Asia Pacific Index has gained 6.4% this month, making it the best February performance since the inception of the index in 1998. The gauge is also poised to outperform the S&P 500 Index for a third consecutive month. US equity-index futures traded weaker in early Asian Friday trading, indicating more losses for the US benchmarks.

Asian equities have outperformed European and US benchmarks as investors bought into companies supplying the AI build-out, viewing the region’s firms as the “picks and shovels” of the supply chain. By contrast, the disruptive potential of the new technology has roiled stocks across sectors for weeks in the US in what’s become known as the “AI scare trade.”

Global asset managers who collectively oversee more than $20 trillion of assets have grown more bullish across emerging-market equities, currencies, domestic bonds and credit, potentially offering fresh momentum to the sector’s record-busting rally.

Citigroup Inc., which reviewed the published outlooks of some of the world’s biggest asset managers, found that funds had added to long positions in markets across Asia, Latin America, as well as Europe, the Middle East and Africa. The findings came as MSCI’s main emerging equity index trades close to record highs.

In other corners of the market, Treasuries held their gains with the yield on the 10-year hovering around 4%. At one point during the US session, it touched its lowest this year. Australia’s 10-year yield declined five basis points to 4.65% early Friday. The dollar wavered.

West Texas Intermediate crude extended its losses to trade under $65 a barrel. The US and Iran will continue nuclear talks next week after making “significant progress” in Switzerland, mediator Oman said.

Technology shares were the biggest decliners in Asia on Friday. That came after a drop in Wall Street benchmarks, as sentiment was weighed down by a muted reaction to Nvidia Corp.’s earnings.

The sober response to Nvidia’s results, which included beats on revenue, net income and guidance, was partly because investors now expect such outperformance, according to Hardika Singh at Fundstrat Global Advisors.

“But where it did miss was easing investors’ concerns about its narrowing moat in the evolving world of compute and explaining its gameplan for how it’ll fare in a world of AI disruption that could upend all kinds of businesses from cybersecurity to food delivery to banks,” she said.

Meanwhile, AI headlines continued to hit the market even after the closing bell in New York.

Shares in Jack Dorsey’s payments giant Block Inc. surged more than 20% in after-market trading following news the company would cut nearly half its workforce — some 4,000 roles — in a pivot to AI. Dell Technologies Inc. shares also jumped in extended trading after a better-than-expected outlook for sales of artificial intelligence servers.

In Japan, Tokyo’s core inflation gauge eased to the slowest pace in more than a year as Prime Minister Sanae Takaichi’s utility subsidies curbed household energy costs. The yen was a touch stronger Friday.

Corporate Highlights:

Netflix Inc. dropped out of the fight to buy Warner Bros. Discovery Inc., clearing the way for rival bidder Paramount Skydance Corp. to clinch its $111 billion deal for the historic Hollywood studio. Baidu Inc. reported a drop in its revenue for the third consecutive quarter, underscoring the magnitude of weakness in its core advertising and AI businesses. Coupang Inc. reported a surprise loss in the fourth quarter, underscoring the strain facing the company following a massive data breach in South Korea, its main market. Baidu Inc. reported a drop in its revenue for the third consecutive quarter, underscoring the magnitude of weakness in its core advertising and AI businesses. JM Smucker Co. said two new directors will be joining its board as part of an agreement reached with activist investor Elliott Investment Management. Celsius Holdings Inc. posted sales which more than doubled from a year earlier following its acquisition of Alani Nu. Some of the main moves in markets:

Stocks

S&P 500 futures fell 0.4% as of 10:12 a.m. Tokyo time Hang Seng futures were little changed Nikkei 225 futures (OSE) fell 0.9% Japan’s Topix rose 0.3% Australia’s S&P/ASX 200 was little changed Euro Stoxx 50 futures fell 0.1% Currencies

The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1800 The Japanese yen rose 0.3% to 155.73 per dollar The offshore yuan fell 0.2% to 6.8551 per dollar The Australian dollar was little changed at $0.7104 Cryptocurrencies

Bitcoin fell 0.8% to $66,928.8 Ether fell 1.2% to $2,005.72 Bonds

The yield on 10-year Treasuries was little changed at 4.00% Japan’s 10-year yield declined 1.5 basis points to 2.135% Australia’s 10-year yield declined five basis points to 4.65% Commodities

West Texas Intermediate crude fell 0.4% to $64.92 a barrel Spot gold fell 0.2% to $5,176.56 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Winnie Hsu, Shikhar Balwani and Richard Henderson.

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