Asian shares showed an upward trend on Thursday following a significant rally in the U.S. stock market, driven primarily by the performance of computer chip manufacturer Nvidia. Despite this positive momentum in Asia, U.S. futures are slightly declining, and oil prices experienced an increase due to reports suggesting a heightened possibility of conflict with Iran.
U.S. President Donald Trump is reportedly contemplating military action against Iran while reinforcing military resources in the region amid ongoing indirect negotiations concerning Iran's nuclear program. This situation has raised apprehensions that any military strike could escalate into a broader conflict within the Middle East.
Meanwhile, markets across Greater China remained closed due to the Lunar New Year celebrations, though some other Asian markets reopened for trading. In Tokyo, the Nikkei 225 index increased by 0.8%, closing at 57,582.93. Similarly, South Korea's Kospi index surged by 2.8%, reaching 5,661.22, as it reopened after recent holidays. Australia's S&P/ASX 200 edged up by 0.9%, finishing at 9,088.70. Southeast Asian markets also reported gains, with Thailand's SET index rising by 0.9% and India's Sensex slightly increasing by 0.1%.
During European trading on Wednesday, the UK’s FTSE 100 index rose by 1.2%, bolstered by the latest inflation data from the region, which fostered optimistic expectations regarding potential interest rate cuts by the Bank of England. On Wall Street, the S&P 500 experienced a 0.6% increase, closing at 6,881.31, while the Dow Jones Industrial Average rose by 0.3% to 49,662.66. The Nasdaq composite climbed by 0.8%, finishing at 22,753.63.
Nvidia played a significant role in lifting market sentiment, rising 1.6% after Meta Platforms announced a strategic partnership involving the use of millions of Nvidia's chips in its AI data centers. Nvidia's CEO, Jensen Huang, highlighted the scale of AI deployment at Meta, positioning the company as the most valuable firm on Wall Street and underscoring its influence on the S&P 500's performance.
This upward movement in the stock market reflects the potential benefits of AI development. However, investors are also wary of possible downsides, leading to noticeable fluctuations in stock prices. Notably, Meta’s stock experienced volatility, initially dropping by 1.7% before recovering and closing 0.6% higher. Analysts have warned that successful AI innovations could disrupt various industries, prompting aggressive sell-offs in stocks perceived to be vulnerable to technological advancements.
The release of several positive profit reports contributed to the stock market's gains on Wednesday, marking a strong earnings season for major U.S. companies in the S&P 500. Moreover, Moderna's shares soared by 6.1% after the FDA announced it would review the company’s flu vaccine candidate, which had previously been declined for consideration.
In the bond market, treasury yields saw a modest increase, with the yield on the 10-year Treasury note rising to 4.08%, up from 4.05% on Tuesday. Reports indicated that industrial production improved more than expected last month, alongside increased orders for long-lasting manufactured goods, excluding transportation equipment. Additionally, homebuilders initiated construction on more new homes than anticipated in December, offering further optimism regarding the U.S. economy.
Such robust economic data may influence the Federal Reserve's decision to maintain interest rates. Although the Fed has paused interest rate cuts, market expectations suggest that hikes could resume later this year, possibly during the summer following the transition of leadership in the Fed. Minutes from the Fed's recent meeting indicated that many officials wanted to see a further reduction in inflation before endorsing additional rate cuts.
In terms of commodities, the U.S. benchmark crude rose by 30 cents to $65.36 per barrel, with Brent crude increasing by 27 cents to $70.62. Meanwhile, gold and silver prices remained stable, and Bitcoin experienced a 1.3% decline, trading at approximately $67,000.
