Shares rose at the open in Japan and South Korea, while those in Australia rallied. Equity futures Hong Kong pointed to advance. Contracts for US equities were little changed in Asia trading after the tech-heavy Nasdaq 100 index closed at an all-time high as TSMC’s earnings spurred the biggest rally in chipmakers in more than a month.
The main supplier of chips to Apple Inc. and Nvidia Corp. said it sees a return to solid growth this quarter as it moves ahead with plans for plants in Japan, Arizona and Germany. Stocks including XinTec Inc. and Samsung Electronics Co. will be in focus in Asia after TSMC’s American depository receipts jumped almost 10% to close at the highest since February 2022, while the Philadelphia Semiconductor Index gained 3.4%.
“A few positive developments lifted Wall Street overnight, which was clearly a nice reprieve from central bankers pushing back on multiple cuts,” said Matt Simpson, a senior market strategist at City Index. “Tech stocks should outperform on the back of the Nasdaq’s record high, and likely led by AI-related companies, given TSMC’s positive revenue outlook.”
Treasuries and the dollar steadied as investors paused following this week’s frenetic repricing of the outlook for Federal Reserve interest-rate policy. Traders see the prospect of a rate cut in March at little more than a coin toss, down from almost 80% at the end of last week after hawkish Fedspeak and data indicating the American consumer remains resilient.
The yen was little changed following the release of Japanese inflation data that showed a deceleration in December. That provides the Bank of Japan with another reason to wait beyond next week’s board meeting before ending its negative rate policy.
Looking for signs
Broadly, stock traders were unfazed by data underscoring US labour-market strength at a time when Fed officials are looking for signs of a slowdown as they contemplate cutting rates. Fed Bank of Atlanta President Raphael Bostic urged legislators to proceed cautiously given the potential impacts of unpredictable events from elections to global conflicts. His Philadelphia counterpart Patrick Harker said he expects inflation to keep ebbing toward the target.
“Given the underlying strength of the US economy, it’s difficult to get too bearish at this point,” said Chris Zaccarelli at Independent Advisor Alliance. “The pervasive pessimism and doubt about the stock market and economy is a contrarian signal and one of the best reasons to push against the crowd. Once the last sceptic has been converted, the market will be again vulnerable to a large shock, but we aren’t at that point yet.”
Coming off its best weekly winning streak in two decades, the S&P 500 has run into a roadblock in 2024, with its all-time closing record set two years ago remaining elusive. But a technical gauge that measures the momentum to buy or sell stocks signals that bulls are still stepping in to snap up shares.
Elsewhere, oil was steady after closing at a three-week high on escalating tensions in the Middle East, with the US and the Iranian-backed Houthis trading tit-for-tat strikes that have upended the global shipping market.
