Post by : Saif Rahman

On Friday, Asian stock markets exhibited a positive trend, displaying cautious optimism after favorable returns on Wall Street. Nevertheless, concerns in the technology sector loomed larger, driven by Oracle’s significant share price drop, which raised doubts about the viability of substantial investments in artificial intelligence.

Japan stood out with notable gains, as the Topix index achieved a record high, buoyed by strong performances from mining and technology-associated firms. SoftBank marked a 6% increase, contributing to the upbeat atmosphere in Tokyo. The Nikkei rose by 1.3%, reflecting solid investor sentiment.

Regionally, MSCI’s wide index for Asia-Pacific stocks outside of Japan gained nearly 1%, moving in line with the gains witnessed in major U.S. markets, highlighted by the Dow Jones and Russell 2000 reaching new peaks. Conversely, the Nasdaq experienced a dip due to increasing pressure on tech stocks.

This strain primarily stemmed from Oracle, which suffered a 13% drop in its shares after announcing disappointing forecasts and substantial new expenditures on data centers. Concerns grew that firms heavily investing in AI might not see returns in the near term, reigniting doubts regarding the AI boom and prompting a broader selloff in tech equities.

Some relief was provided by Broadcom, which forecasted increased revenues for early next year. However, the firm indicated potential declines in profit margins due to the growing proportion of AI sales, leading to a 5% decline in the company's stock during after-hours trading that curtailed any recovery in the tech sector.

Meanwhile, the global currency markets continued to respond to the U.S. Federal Reserve’s latest decisions. The U.S. dollar slipped to a two-month low following the Fed's indication of a softer approach to interest rate adjustments. Additionally, an increase in new jobless claims in the U.S. only compounded the pressure on the dollar.

Expectations in the financial markets are now trending toward the U.S. holding interest rates steady in the forthcoming January meeting, with investors anticipating at least two rate cuts next year if inflation subsides.

In the commodities realm, Shanghai copper prices soared to an all-time high, buoyed by China’s commitment to increased fiscal support next year, which instilled further confidence in industrial metals. Brent crude oil prices experienced a slight uptick as focus shifted to peace negotiations between Russia and Ukraine.

Precious metals, conversely, pulled back from peak levels, with gold dipping 0.1% and silver also falling after reaching historical heights. In cryptocurrency markets, market activity remained subdued; Bitcoin decreased by 0.5%, while Ethereum remained slightly lower.

In summary, while Asian markets displayed resilience, persistent anxiety regarding tech stocks—particularly those tied to AI—kept investors cautious. The upcoming weeks will likely be crucial in determining whether the region can maintain this upward trajectory amid shifting global economic indicators from the U.S.

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