Stock Rally Powers On With Japan Tech, Yen Falls: Markets Wrap

(Bloomberg) — The global stock rally stretched into a sixth day, with optimism over artificial intelligence driving equities higher.

MSCI’s world index gained 0.1% with technology shares in Japan leading the charge in Asia. Hitachi Ltd. climbed the most since April after teaming up with OpenAI while Fujitsu Ltd. jumped over 5% on a partnership with Nvidia Corp. Asian shares rose 0.4% and futures indicated more gains for the S&P 500 and the Nasdaq 100 after both underlying benchmarks closed at a record high.

Investors are cheering a wave of AI alliances, wagering that the billions pouring into the sector will translate into profits and extend gains in tech shares. The rally underscored how bullish momentum in the sector is overshadowing concerns about the Trump administration’s plan to cut “thousands” of federal jobs amid the second day of a government shutdown.

“The S&P 500 and Nasdaq continue to set fresh records, with government shutdown risks failing to dampen market risk appetite,” Dilin Wu, a strategist at Pepperstone Group, wrote in a note. “Funds are still flowing into high-beta sectors.”

In other corners of the market, the yen weakened against the dollar after Bank of Japan Governor Kazuo Ueda kept his policy options open by reiterating the bank’s long-held stance on interest rates. Ueda avoided sending any clear signals about the prospects for a rate hike when the board meets later this month.

Market speculation over an impending rate hike had gained momentum in recent weeks. Two board members dissented from the decision to hold settings steady last month, and a member considered dovish cited the heightened need for policy change in a speech earlier this week.

Gold headed for a seventh weekly advance while oil was on track for its biggest weekly decline since late June, ahead of an OPEC+ meeting that’s expected to result in the return of more idled barrels.

A Bloomberg gauge of the dollar held its gains from the prior session while Treasuries edged lower with the yield on the 10-year gaining one basis point to 4.09%.

What Bloomberg strategists say…

Japanese equities are on the way to establishing a higher trading range, one that looks set to run through the current earnings season which will be in full swing next month. Also, investors don’t see any big shocks coming from this weekend’s LDP leadership race.

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

Tech stocks got a fillip after OpenAI completed a deal to sell shares in the company at a $500 billion valuation, propelling the ChatGPT owner past Elon Musk’s SpaceX to become the world’s largest startup.

A combination of stable commodity prices, interest-rate cuts by the Federal Reserve and a range-bound dollar are boosting market sentiment, Homin Lee, Lombard Odier senior macro strategist, said in a Bloomberg TV interview.

“We’ll start to test the limits of this rally when there is a shift in the political and policy dialog regarding the Fed policy,” he said. “We’re in the middle of a potential transition at the Fed, so this euphoric sentiment could actually last quite a bit. And that’s certainly the risk that we are dealing with here.”

Elsewhere, Treasury Secretary Scott Bessent predicted a “pretty big breakthrough” in the next round of trade talks with China. The comments come as the Trump administration takes steps to support US farmers hurt by a decline in Chinese purchases.

Traders were also contending with the temporary blackout in economic readouts after Thursday’s weekly initial jobless claims numbers were delayed by the government closure. The Bureau of Labor Statistics’ nonfarm payrolls data on Friday will also likely be delayed amid the shutdown.

“A quick shutdown that sets back the report a few days might not move the needle, but a long one that also threatens release of mid-month inflation data might keep the Fed on the sidelines, unwilling to cut rates at its late October meeting without the data,” according to Joe Mazzola, head trading and derivatives strategist at Charles Schwab Corp.

Corporate News:

Applied Materials Inc., the largest US maker of machinery used to manufacture semiconductors, said an expansion of rules that restrict the export of its products to China will take another chunk out of its revenue. Asahi Group Holdings Ltd. suspended some beverage shipments on Monday after a cyberattack hobbled some of the drinks company’s operations in Japan. Boeing Co.’s 777X is slated to fly commercially for the first time in early 2027 instead of next year, people familiar with the matter said. Oracle Corp. is investigating hacks of numerous customers’ E-Business Suite applications following an extortion campaign targeting large organizations. Dongfeng Motor Group shares surge as much as 6.1% in Hong Kong, the biggest intraday gain since August, after its electric-vehicle subsidiary Voyah Automotive Technology filed for an IPO in the city. BYD led Chinese electric vehicle shares lower in Hong Kong with sentiment clouded by Tesla’s stock selloff in the US amid concerns over the global EV demand outlook. Some of the main moves in markets:

Stocks

S&P 500 futures rose 0.2% as of 1:07 p.m. Tokyo time Nikkei 225 futures (OSE) rose 1.4% Japan’s Topix rose 1.3% Australia’s S&P/ASX 200 rose 0.5% Hong Kong’s Hang Seng fell 0.9% Euro Stoxx 50 futures rose 0.3% Currencies

The Bloomberg Dollar Spot Index was little changed The euro rose 0.1% to $1.1727 The Japanese yen fell 0.2% to 147.60 per dollar The offshore yuan was little changed at 7.1366 per dollar The Australian dollar was little changed at $0.6599 Cryptocurrencies

Bitcoin fell 0.3% to $120,398.26 Ether rose 0.3% to $4,509.11 Bonds

The yield on 10-year Treasuries advanced one basis point to 4.09% Australia’s 10-year yield was little changed at 4.34% Commodities

West Texas Intermediate crude rose 0.6% to $60.82 a barrel Spot gold fell 0.3% to $3,845.05 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Bernadette Toh.

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