Asian shares rose cautiously as the technology sector was rocked by Oracle
Asian shares rose on Friday following gains on Wall Street overnight, although a fresh drop in Oracle’s share price raised jitters in the technology sector.
Financial markets had to move quickly to find their footing this week as the Federal Reserve cut interest rates but offered a less hawkish outlook than expected, and returning concerns over an AI bubble added pressure for investors.
Elsewhere, copper prices in Shanghai rose to a record high and were on track for a third straight weekly rise, supported by pledges of fiscal increases by top consumer China next year.
MSCI’s broadest index of Asia Pacific shares outside Japan rose nearly 1%, tracking most US markets higher on Thursday – the Dow and Russell 2000 indexes hit new highs but the Nasdaq fell.
Japan’s Topix surged to a record high and last traded 1.9% higher, led by an 8.2% rise in Sumitomo Metal Mining. The Nikkei 225 rose 1.3%.
S&P 500 e-mini futures were little changed and Nasdaq futures fell 0.1% as markets jittered after Oracle shares plunged 13%, triggering a tech selloff, as the company’s spending spree and weak forecasts fanned doubts about how quickly big bets on AI will pay off.
EUROSTOXX 50 futures and FTSE futures each rose 0.5%.
“Oracle announced disappointing earnings alongside further investment in data centres, sparking new concerns about AI-related spending, and investors are questioning whether high levels of investment will ultimately deliver expected returns,” analysts from Westpac wrote in a research note.
Technology stocks got support after Broadcom projected first-quarter earnings above Wall Street estimates on Thursday. But the gains were tempered after the company said margins would fall due to higher combined AI revenue, dragging its shares down 5% in extended trading.
The US dollar index, which measures the greenback’s strength against a basket of six currencies, was last near a two-month low of 98.37, after the Fed’s interest rate outlook was less hawkish than expected.
Overnight, the dollar weakened further after jobless claims data showed the number of Americans filing new applications for jobless benefits rose the most in nearly 4-1/2 years last week. Data has fluctuated frequently throughout the year, and the four-week average of claims suggests that labor market conditions remain stable.
Fed funds futures factor in an implied probability of 75.6% that the U.S. central bank will keep interest rates on hold at its next meeting on Jan. 28, compared with a 73.9% chance the previous day, according to CME Group’s FedWatch tool.
Markets are pricing in at least two rate cuts over the next year after Fed Chair Jerome Powell said at a post-policy press conference that he doesn’t “think rate hikes are a top option for anyone.”
The yield on the 10-year US Treasury bond was last at 4.1586%, up almost 2 basis points compared with late US levels.
Brent crude rose 0.77% to $61.75 a barrel as investors focused their attention on Russia-Ukraine peace talks, after earlier rising on news that the US had seized an oil tanker off the coast of Venezuela.
On Thursday, the US issued new sanctions targeting Venezuela, imposing restrictions on three nephews of President Nicolas Maduro’s wife, as well as six crude oil tankers and shipping companies linked to them.
The precious metals market retreated from its new high. Gold fell 0.1% to $4,278.07, while silver fell from a record high and was last bought at $63.77.
Crypto markets remained under pressure, with bitcoin down 0.5% at $92,455.10 and ether down slightly at $3,248.19.
Source: Reuters
