Nikkei 225 Surges to 34-Year High on Tech Earnings and Dovish BOJ
Asian Stocks Respond to Anticipation of U.S. Inflation Data
Most Asian stocks rose slightly on Tuesday in anticipation of key U.S. inflation data. Japan’s rallied to 34-year highs on positive earnings from the technology sector and dovish signals from the Bank of Japan.
Wall Street Influence on Regional Stocks
Regional stocks took a mixed lead-in from Wall Street, as gains in U.S. stocks now appeared to be cooling from a record-high run through last week. , and futures all fell about 0.1% each in Asian trade on Tuesday.
Market Holiday in China and Hong Kong
A week-long market holiday in China and Hong Kong kept Asian trading volumes relatively low, and also made for a dearth of regional cues.
Key Outlier: Nikkei 225
The Nikkei 225 was a key outlier among its regional peers, rallying 2.5% to a 34-year high on strength in major technology stocks, following positive earnings from chipmaker Tokyo Electron Ltd. (TYO:) and investment house SoftBank Group Corp. (TYO:).
Positive Earnings Impact
Tokyo Electron surged nearly 11% to an over three-year high after it clocked a stronger profit for the December quarter, and also flagged increasing demand in China.
Technology Sector Gains
SoftBank jumped 6.7% to a near three-year high, extending gains after clocking its first profitable quarter in five. The stock also tracked overnight gains in its chipmaking unit Arm Holdings (NASDAQ:), whose U.S. shares surged 29% on Monday amid continued hype over its prospects in an artificial intelligence boom.
Impact of Dovish BOJ
Gains in the two tech majors spilled over into the broader sector. Japanese stocks also saw extended gains after Deputy Bank of Japan Governor Shinichi Uchida said that while the BOJ will raise interest rates this year, it will likely do so at a slow pace- heralding continued easy monetary conditions for local stocks.
Ripple Effect in Other Asian Markets
AI-driven gains in the chipmaking sector spurred strength in other Asian markets. South Korea’s rose 1%, buoyed chiefly by Samsung Electronics Co Ltd (KS:) and SK Hynix Inc (KS:).
Collaboration in the Technology Sector
SK Hynix jumped nearly 4% after South Korean media reported that the firm had tied up with Taiwan’s TSMC (TW:) (NYSE:) to develop new AI chips- as a growing number of firms moved to capitalize on the AI boom. TSMC- the world’s largest chipmaker by volume- rose 1.7% in Taiwan trade.
Anticipation of U.S. Data
Other Asian shares were slightly positive, although bigger moves were limited on account of a Chinese market holiday and anticipation of U.S. data. The reading is expected to show that inflation eased in January, but remained well above the Federal Reserve’s annual target range- a scenario that gives the central bank little cause to begin cutting interest rates.
Market Response in Australia and Southeast Asia
Waning bets on early interest rate cuts by the Fed were a major pain point for Asian markets in recent weeks. Australia’s rose 0.1%, as a private survey showed a substantial improvement in through early-February. led gains across Southeast Asia with a 0.4% rise, while futures for India’s index pointed to a muted open, after the index slid 0.8% to a near two-week low on Monday.
