By Scott Murdoch
SYDNEY, Feb 25 (Reuters) – Asia’s financial markets were sharply higher on Wednesday as tech stocks across the region soared with investors doubling down on what they see as the safest bet on artificial intelligence (AI), while the yen remained in focus.
U.S. President Donald Trump boasted of stock market gains in his State of the Union speech and said “almost all” countries and corporations want to stick to tariff and investment agreements previously made with Washington.
Financial markets showed little reaction to the speech. Futures markets were pointing to a mildly positive start in the U.S with S&P 500 E-minis up 0.07% while Nasdaq 100 E-minis were up 0.11%. EURO STOXX 50 futures was up 0.2%.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.76% as a number of regional markets reached record highs.
The benchmark Nikkei 225 index rose 2.7% to 58,853.87, its highest level ever, with gains led by tech sector related stocks. The broader Topix was up 1.1% at 3,857.15.
Korea’s KOSPI was up 2.6% and trading well above 6,000 for the first time. The index is up 45% so far this year.
A global memory chip shortage has seen Samsung Electronics and SK Hynix stock prices double since October, as cash has surged up the AI supply chain to the enormously popular chipmakers. Leading global chipmaker Nvidia Corp reports its fourth-quarter results after the U.S market close on Wednesday.
In Hong Kong, the Hang Seng Index was up 0.36% and China’s CSI300 was 0.3% higher.
Australia’s S&P/ASX200 was 1% higher after earlier reaching a record high despite higher consumer prices in January which increased the risk of more interest rate hikes. Bluechip Australian food retailer Woolworths recorded its biggest one-day gain since 1997, jumping more than 12%, after reporting better than expected first-half results.
The Japanese yen was flat against the greenback after early being in positive territory and trading at 155.86 per dollar. The currency dropped by 0.8% on Tuesday.
A news report said Japanese Prime Minister Sanae Takaichi had conveyed her reservations about further interest rate hikes to Bank of Japan Governor Kazuo Ueda, raising doubts over the next rate increase.
The Japanese government on Wednesday nominated two academics seen by markets as reflationists to join the Bank of Japan’s nine-member board, in appointments seen as a gauge of the Takaichi administration’s thinking on monetary policy.
The appointments, shown in a document presented to parliament, briefly sent the yen down past 156 per dollar and boosted the Tokyo stock market.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro,fell 0.14% to 97.75, with the euro up 0.18% at $1.1792.
A Reuters poll released last week showed that a majority of economists expected the BOJ to raise its key rate to 1% by the end of June, with some anticipating a move as soon as April because of mounting concerns about inflationary pressures and a weak yen.
Traders are currently pricing in 50% odds of a hike in April, and a 65% chance of a hike by June.
“Given there was an expectation that she would shift her stance on monetary policy this latest news brings uncertainty back into the market,” NAB analysts said.
The yield on benchmark U.S. 10-year notes rose 1.5 basis points to 4.048%, while the 30-year bond yield rose 1.3 basis points to 4.702%.
Positive sentiment towards the AI sector returned overnight after San Francisco-based startup Anthropic unveiled 10 new ways for business customers to use its AI plugins, which revived enthusiasm that AI would boost profits across a range of different sectors.
AI-related stock prices have see-sawed in recent weeks as investors were concerned heavy capital spending on AI may not translate into profits soon,
Speeches on Tuesday by Federal Reserve governor Lisa Cook and Chicago Fed president Austan Goolsbee noted it was their view the US labour market could be starting to stabilise.
“It’s apparent that most members think it as appropriate to wait for further progress on inflation before adjusting policy lower,” said ANZ analysts.
ANZ has predicted the Fed will start easing rates in the second quarter, most likely in June and forecast 75 basis points of cuts this year.
U.S. crude rose 0.62% to $66.04 a barrel and Brent rose to $71.21, up 0.62% on the day.
Spot gold rose 0.68% to $5,182.94 an ounce while spot silver rose 2.36% to $89.39 an ounce.
(Editing by Kim Coghill)
