Asian Markets Soar After Nvidia Boost
Asian stocks rose on Thursday following positive earnings from Nvidia, which alleviated worries about AI-related disruptions and increasing costs. Meanwhile, the yen struggled, weighed down by an unclear interest rate outlook in Japan. Concerns regarding rising geopolitical tensions between the US and Iran have sustained high oil prices, as a third round of discussions between the two nations approaches later on Thursday. Nvidia on Wednesday projected first-quarter revenue exceeding market expectations, relying on Big Tech’s continued investment in its AI processors. The outcome, which had garnered significant attention from investors, alleviated certain concerns regarding the substantial investments that companies are directing towards various aspects of AI.
That contributed to Japan’s Nikkei reaching a record high early in the session, while South Korea’s KOSPI increased by 2 per cent. MSCI’s broadest index of Asia-Pacific shares outside Japan increased by 0.7 percent. “Nvidia’s print was strong enough to keep the AI capex cycle alive. The immediate market reaction is relief, translating into a modest risk-on tone after the AI-driven volatility of recent weeks,” said Charu Chanana. Traders have fluctuated in their enthusiasm for the AI trade in recent weeks, grappling with concerns over investment returns and the technology’s capacity to disrupt entire industries, while also feeling reluctant to remain passive. “The debate has been much less about stellar near-term results and more about the sustainability of AI capex spending given concerns around its quantum, monetisation and cashflow degradation,” said Richard Clode. Shares of Nvidia initially surged in extended trading following the results, but later retraced those gains, resulting in Nasdaq futures declining by 0.25 percent and S&P 500 futures falling by 0.14 percent. EUROSTOXX 50 futures experienced a slight increase of 0.06 per cent. The yen captured the attention of investors, remaining close to the two-week low it reached following Japan’s government nomination of two academics perceived by markets as robust proponents of economic stimulus for the central bank’s board.
The unexpected decision was interpreted in financial circles as indicative of Prime Minister Sanae Takaichi’s inclination towards a lenient monetary policy, raising doubts about the prospects for additional rate increases by the Bank of Japan. The yen was last seen at 156.01 per dollar, reflecting a 0.2 per cent increase, aided by a generally weaker greenback on Thursday. However, it has declined approximately 0.6 per cent for the week to date. “Dovish-leaning BOJ nominees have reignited concerns the central bank may lag policy normalisation, weakening the JPY and steepening JGB curve,” said strategists in a note. “Our end-2026 USD/JPY forecast stays at 149, as the currency is unlikely to transition from a funding currency to an investment currency unless the BOJ turns more hawkish than our baseline outlook of two rate hikes this year.” The Yomiuri newspaper reported on Thursday that BOJ Governor Kazuo Ueda “left the door open to a near-term rate hike,” lending some support to the currency. The dollar faced challenges, as the euro increased by 0.12 percent to $1.1824, while sterling climbed 0.08 percent to $1.3570.
In oil markets, prices increased as concerns about the potential threat to supply from military conflict between the US and Iran persisted. Brent crude futures increased by 0.27 percent, reaching $71.04 a barrel, while US crude saw a rise of 0.24 percent, climbing to $65.55 per barrel. On Wednesday, senior officials from the Trump administration articulated their position that Iran represents a significant threat to the United States, in anticipation of Thursday’s discussions regarding Tehran’s nuclear program. Spot gold experienced an increase of 0.27 per cent, reaching $5,184.66 an ounce, supported by a rise in safe-haven demand.
