Asian markets rally on tech surge

Asian stocks surged on Thursday, mirroring a powerful rebound in global technology shares led by Meta and Nvidia.

Additionally, prospects of an imminent interest rate cut by the US Federal Reserve boosted global bonds and commodity prices.

The Fed left interest rates unchanged on Wednesday but signalled a potential cut in September.

This shift in stance prompted market speculation that the Bank of England (BoE) might follow suit later today, with the probability of a rate cut estimated at 60 per cent.

The Japanese yen extended its impressive rally, gaining another 0.8 per cent to a 4.5-month high of 148.82 per dollar.

This follows a significant 1.8 per cent surge overnight, fuelled by the Bank of Japan’s (BOJ) second interest rate hike in 17 years, signaling further tightening.

The MSCI broadest index of Asia-Pacific shares outside Japan climbed 0.7 per cent, recovering from its mostly flat performance at the end of July. The regional MSCI IT index jumped 2.0 per cent, and Taiwan’s stocks surged 1.7 per cent.

However, Japan’s Nikkei index opened lower, dropping three per cent due to the yen’s strength affecting the outlook for the country’s exporters.

Chinese blue chips initially edged higher but turned 0.3 per cent lower after a private survey revealed an unexpected contraction in China’s manufacturing sector during July. This raises concerns about the country’s economic growth momentum.

On Wall Street, technology stocks are staging a remarkable comeback following a recent sell-off.

Nasdaq futures jumped one per cent in Asia, fuelled by a seven per cent surge in Meta Platforms’ shares after the company reported better-than-expected earnings. S&P 500 futures also gained 0.5 per cent.

Heavyweight tech companies Apple and Amazon are scheduled to report earnings later on Thursday. Nvidia has already rallied significantly, adding an impressive $330 billion to its market valuation on Wednesday.

The dollar weakened against the surging yen, dragging down its broader value against a basket of major currencies. The dollar index slipped 0.2 per cent to 103.87 on Thursday, extending its 0.4 per cent decline from Wednesday.

Oil prices continued their overnight upsurge following the killing of a Hamas leader in Iran, which heightened concerns about a wider conflict in the Middle East.

Brent crude futures rose 0.7 per cent to $81.44 per barrel, while US West Texas Intermediate crude futures increased 0.9 per cent to $78.61 per barrel, both extending their gains from a four per cent jump seen in the previous session.

Gold prices also rose slightly, gaining 0.4 per cent to $2,456.59 per ounce.

Attribution: Reuters