Investors in Asian markets showed renewed optimism and enthusiasm for artificial intelligence (AI) on Tuesday, driving a surge in regional technology stocks. The focus also remained on upcoming inflation reports, which could provide further insights into the possibility of interest rate cuts later this year.
After a rocky start to the year, regional markets saw a recovery with the optimism surrounding early interest rate cuts by the Federal Reserve being questioned. The upcoming U.S. inflation data is expected to shed more light on this matter.
Japan’s market index experienced a significant surge of 1.4% following a long weekend. The positive movement was largely influenced by data showing that inflation had fallen as predicted in December, inching closer to the Bank of Japan’s target of 2% for the year.
Although sentiment towards Japan was weakened by a devastating earthquake, some investors placed bets on the Bank of Japan delaying plans to end its dovish policies due to post-disaster rebuilding efforts.
The surge in Asian tech stocks, particularly those associated with AI, further boosted market confidence. Advantest Corp., a chip testing equipment maker, saw a nearly 7% surge in its stock price, making it one of the top performers on the Nikkei. In Hong Kong, the market index climbed 1%, driven by technology stocks, with Lenovo Group, a PC maker, rallying 6.1% after announcing the release of over 40 new AI-powered devices and products at the Consumer Electronics Show.
The hype surrounding AI also reignited after chipmaker NVIDIA Corporation experienced a surge of over 6% on Monday, with New Street Research naming it as one of their top stock picks for 2024. This momentum spilled over into the Asian markets.
While gains in broader tech stocks helped offset Samsung Electronics’ decline of 0.5%, there was still a 0.3% rise in South Korea’s market index. SK Hynix Inc., which focuses on advanced memory chips linked to AI development, experienced a rise of over 2% despite Samsung’s fourth-quarter profit slump.
The rally in tech stocks was partially fueled by bargain hunting, as the sector took a hit in the first week of the year due to growing doubts about early interest rate cuts by the Fed. These doubts persist ahead of the release of key U.S. inflation data on Thursday, which is expected to show a mild increase in December inflation.
Overall, Asian stocks across various markets advanced, reflecting a positive trend. Australia’s market index rose 1.1% after data revealed a larger-than-expected surge in retail sales through November. Chinese stocks, previously among the worst performers in Asia, also saw a slight increase.
Investors are eagerly anticipating upcoming figures on Chinese inflation as well as India’s market index, which is expected to recover from significant losses in the first week of the year. Furthermore, the market will closely watch quarterly earnings reports from heavyweights Infosys Ltd and Wipro Ltd, along with data on India’s industrial production for December.
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The source of the article is from the blog foodnext.nl