Shares in Asia experienced an uptick on Wednesday, with Japan's benchmark index, the Nikkei 225, rising more than 1%. Specifically, the Nikkei 225 added 1.2%, reaching a midday level of 57,249.43 as lawmakers prepared to reappoint Sanae Takaichi as prime minister following a significant victory for her ruling Liberal Democratic Party in a February 8 election. Meanwhile, most Asian markets remained closed in observance of Lunar New Year holidays.
In contrast, U.S. futures showed little movement, remaining flat while oil prices saw a slight increase. In Australia, the S&P/ASX 200 index rose by 0.4% to reach 8,993.20. India's Sensex recorded a modest gain of 0.1%, and in Bangkok, the SET index advanced by 0.5%. Conversely, New Zealand's S&P/NZX 50 experienced a decline of 0.7%.
The previous day, U.S. stocks exhibited volatility, flipping between gains and losses. The S&P 500 managed to rise by 0.1% to close at 6,843.22, while the Dow Jones Industrial Average also increased by 0.1% to end at 49,553.19. The Nasdaq composite followed suit, gaining 0.1% to finish at 22,578.38. Paramount Skydance stood out, surging 4.9% after Warner Bros. Discovery announced it would allow Paramount to submit a final bid to purchase the entertainment company, potentially outbidding Netflix.
Warner Bros. Discovery shares climbed 2.7%, while Netflix's stock saw a minor increase of 0.2%. However, General Mills faced a significant setback, with shares plummeting by 7% after issuing a warning regarding consumer unease. The manufacturer of brands such as Cheerios, Nature Valley, and Pillsbury lowered its profit forecasts for 2026, anticipating sharper declines than previously expected. Recent surveys indicated a troubling trend of declining confidence among U.S. households, who are grappling with persistent inflation, a struggling job market, and increasing tariff concerns.
In Tuesday's trading, declines in several prominent tech stocks weighed heavily on the market. Alphabet's shares fell by 1.2%, while Nvidia experienced fluctuations as it alternated between being a significant drag and a major contributor to market performance. Last week, stocks in the software sector and related industries suffered losses as investors reassessed which companies might be vulnerable to disruption from advancements in artificial intelligence (AI).
The market sentiment has shifted markedly from last year, when AI advancements propelled U.S. stock indexes to unprecedented heights. Now, companies encompassing various sectors, from software to trucking, are witnessing investor skepticism over the potential threat posed by AI-powered competitors. Companies heavily investing in AI technologies are under pressure to demonstrate substantial profit growth and productivity gains to justify their expenditures. For instance, Alphabet indicated that its investments in AI and other initiatives could double to approximately $180 billion this year.
Stephen Innes of SPI Asset Management captured the current market environment by commenting, "So we have a market that simultaneously believes AI will destroy everything and, at times, deliver nothing." Furthermore, a Bank of America survey revealed an unprecedented number of global fund managers expressing concerns regarding what they perceive as excessive investment in AI among companies, signaling a potential reduction in capital expenditures on chips from firms like Nvidia.
Turning to early Wednesday trading, U.S. benchmark crude oil prices increased by 20 cents, bringing the price to $62.53 per barrel, while the international standard, Brent crude, saw a rise of 24 cents to $67.66 per barrel. The U.S. dollar appreciated against the Japanese yen, rising to 153.54 yen from a previous value of 153.29 yen. Meanwhile, the euro experienced a minor dip, trading at $1.1845 compared to $1.1854 before. Gold prices saw an uptick of 0.9%, and silver prices increased by 2.2%. In a downturn, Bitcoin's value decreased by 1.2%, settling at around $67,700.
