(Feb 27): Asian stocks were on track for their best February on record as investors piled into the region’s companies supplying the artificial intelligence (AI) infrastructure build-out.
Even after slipping 0.3% at the start of the last trading day of the month, the MSCI Asia-Pacific Index has gained 6.3% this month, making it the best February performance since the inception of the index in 1998. The gauge is also poised to outperform the S&P 500 Index for a third consecutive month. US equity-index futures fell on Friday, indicating more losses for the Wall Street benchmarks.
South Korea — a bellwether of AI investments — was the standout performer in Asia, with the Kospi Index gaining about 18% this month. It’s the world’s best-performing gauge this year after a 46% surge year to date.
Asian equities have outpaced European and US benchmarks as investors flocked to companies underpinning the expansion of AI infrastructure, viewing the region’s firms as the “picks and shovels” of the supply chain. By contrast, the disruptive potential of the new technology has roiled stocks across sectors for weeks in the US, in what’s become known as the “AI scare trade”.
Global asset managers who collectively oversee more than US$20 trillion ($25.29 trillion) of assets have grown more bullish across emerging-market equities, currencies, domestic bonds and credit, potentially offering fresh momentum to the sector’s record-busting rally.
See also: Asian stocks climb but gains tempered by muted response to Nvidia's upbeat sales forecast
Citigroup Inc, which reviewed the published outlooks of some of the world’s biggest asset managers, found that funds had added to long positions in markets across Asia, Latin America, as well as Europe, the Middle East and Africa. The findings came as MSCI’s main emerging equity index also traded close to record highs.
In other corners of the market, Treasuries held their gains with the yield on the 10-year hovering around 4%. At one point during the US session, it touched its lowest this year. Australia’s 10-year yield declined five basis points to 4.65% early on Friday. The dollar wavered.
Oil steadied after the US and Iran agreed to more nuclear talks next week following a round of discussions on Thursday, as a huge deployment of American forces in the Middle East kept the market on edge.
See also: Asian stocks rise after tech-led rebound in US
Also, gold was poised to close out its longest run of monthly gains since 1973, with February’s 6%-plus climb set to be the seventh on the trot.
Technology shares were the biggest decliners in Asia on Friday. That came after a drop in Wall Street benchmarks, as sentiment was weighed down by a muted reaction to Nvidia Corp’s earnings.
The sober response to Nvidia, which included beats on revenue, net income and guidance, was partly because investors now expect such outperformance, according to Hardika Singh at Fundstrat Global Advisors.
“But where it did miss was easing investors’ concerns about its narrowing moat in the evolving world of compute and explaining its gameplan for how it will fare in a world of AI disruption that could upend all kinds of businesses from cybersecurity to food delivery to banks,” she said.
Meanwhile, AI headlines continued to hit the market even after the closing bell in New York on Thursday.
Shares of Jack Dorsey’s payments giant Block Inc surged more than 20% in aftermarket trading following news the company would cut nearly half its workforce — some 4,000 roles — in a pivot to AI. Dell Technologies Inc shares also jumped in extended trading after a better-than-expected outlook for sales of AI servers.
In Japan, Tokyo’s core inflation gauge eased to the slowest pace in more than a year as Prime Minister Sanae Takaichi’s utility subsidies curbed household energy costs. The yen was a touch stronger on Friday.
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Corporate highlights:
- Netflix Inc dropped out of the fight to buy Warner Bros Discovery Inc, clearing the way for rival bidder Paramount Skydance Corp to clinch its US$111 billion deal for the historic Hollywood studio.
- Baidu Inc reported a drop in its revenue for the third consecutive quarter, underscoring the magnitude of weakness in its core advertising and AI businesses.
- Coupang Inc reported a surprise loss in the fourth quarter, underscoring the strain facing the company following a massive data breach in South Korea, its main market.
Some of the main moves in markets:
Stocks
- S&P 500 futures were 0.4% lower as of 10.52am Tokyo time on Friday
- Japan’s Topix rose 0.4%
- Australia’s S&P/ASX 200 was little changed
- Hong Kong’s Hang Seng rose 0.7%
- The Shanghai Composite was little changed
- Euro Stoxx 50 futures were little changed
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at US$1.1794
- The Japanese yen rose 0.1% to 155.95 per dollar
- The offshore yuan fell 0.2% to 6.8575 per dollar
Cryptocurrencies
- Bitcoin fell 0.3% to US$67,288.68
- Ether fell 0.6% to US$2,018.49
Bonds
- The yield on 10-year Treasuries was little changed at 4.00%
- Japan’s 10-year yield declined two basis points to 2.130%
- Australia’s 10-year yield declined five basis points to 4.65%
Commodities
- West Texas Intermediate crude fell 0.4% to US$64.98 a barrel
- Spot gold rose 0.2% to US$5,192.81 an ounce
Uploaded by Isabelle Francis
