A powerful relief rally swept through Asian financial markets on Thursday, driven overwhelmingly by blockbuster earnings from artificial intelligence giant Nvidia. Investor sentiment, which had been dampened by recent concerns over an AI bubble, reversed dramatically as Nvidia's stellar performance and optimistic forecasts reassured markets.
Tech Titans Lead Market Charge
Tech-heavy markets in Japan, South Korea, and Taiwan emerged as the biggest beneficiaries of the optimistic shift. Tokyo's Nikkei 225 index soared as much as 4.2%, while Korean stocks jumped 3.3% and the Taiwanese market rallied 3.4%. The surge was led by major players in the AI supply chain.
Semiconductor manufacturing giants recorded significant gains. Taiwan Semiconductor Manufacturing Company (TSMC) rose 4.3%, Samsung Electronics advanced 5.1%, SK Hynix jumped 4.5%, and Tokyo Electron surged 5.4%. The broad MSCI index of Asia-Pacific shares outside Japan climbed 1.2%, rebounding from a one-month low.
Nvidia's "Master Class" Calms Nerves
The rally was triggered by Nvidia CEO Jensen Huang's announcement of overwhelming demand for the company's AI chips from major cloud providers. The world's most valuable chipmaker projected quarterly revenue that significantly surpassed Wall Street estimates, effectively quieting fears about excessive AI valuations that had triggered a market sell-off in previous sessions.
Market analyst Tony Sycamore from IG in Sydney described Nvidia's performance as "yet another master class in AI dominance." This sentiment resonated across regional markets, with investors who had questioned whether AI valuation concerns were overblown now returning to tech stocks.
Diverging Fortunes: China Bucks Trend
While most Asian markets celebrated, Chinese markets presented a contrasting picture. Hong Kong's Hang Seng Index declined by 0.1%, while a gauge of mainland stocks erased an earlier gain of 0.7% to trade flat. This underperformance came as the People's Bank of China maintained benchmark lending rates unchanged for the sixth consecutive month.
Although traders had anticipated the steady rates, ongoing worries about weakness in China's economic recovery have intensified calls for additional stimulus measures to support growth.
Dollar Strengthens as Jobs Data Awaited
The U.S. dollar index, which measures the greenback against six major currencies, advanced 0.2% to 100.3, hovering near a two-week high. Market attention is now focused on the release of September's delayed jobs report, expected to provide crucial clues about the Federal Reserve's next policy move.
Recent minutes from the Fed's October meeting revealed that policymakers proceeded with interest rate cuts despite concerns about entrenched inflation and potential loss of public trust in the central bank. According to the CME Group's FedWatch tool, fed funds futures now price only a 33% probability of a 25-basis-point cut at the December 10 meeting, down from 50% just a day earlier.
National Australia Bank senior markets strategist Gavin Friend explained that an updated schedule for the November jobs report, now delayed until December 16, has influenced these expectations. "That's six days after the December FOMC meeting, and that's why the 50% chance of rate cuts has been immediately evaporated," Friend stated on a podcast.
Yen Weakens to Ten-Month Low
The Japanese yen continued its downward trajectory, with the dollar rising 0.2% against the yen to 157.48. The currency reached its weakest level in ten months during U.S. trading hours and set a record-low against the euro. The yen has lost more than 6% of its value since Prime Minister Sanae Takaichi was elected leader of her party, despite rising Japanese yields, due to concerns about borrowing required to fund her stimulus plans.
In other markets, Brent crude rose 0.5% to $63.80 per barrel as traders assessed U.S. proposals to end the Ukraine war. Cryptocurrencies recovered from recent losses, with bitcoin and ether both gaining around 2%. Precious metals showed volatility, with spot gold falling 0.6% to $4,055.19 after earlier rising as much as 0.7%.
