Asian Stocks Rise as Tech Rebounds, Japan Nears Q4 Recession
Most Asian stocks rose on Thursday as major technology shares tracked a rebound in their U.S. peers. Japan’s Nikkei 225 neared record highs even as the economy unexpectedly entered a recession.
Japanese markets shone, but gains across broader Asia were more subdued. Risk aversion still remained in play amid waning bets on early interest rate cuts by the Federal Reserve.
Regional markets took a positive lead-in from Wall Street, with U.S. stock benchmarks closing higher overnight. Persistent hype over artificial intelligence and strong earnings drove gains in heavyweight tech shares.
U.S. and futures edged lower in Asian trade. Analysts said that U.S. stocks were likely due for more losses after Tuesday’s hotter-than-expected inflation data.
Nikkei 225 Nears Record Highs in Spite of Q4 Recession
The Nikkei rose 0.7% to 37,982.50 points- a 34-year high, and within spitting distance of a record-high 38,915 points last seen in 1989.
Gains in the Nikkei were fueled largely by heavyweight tech stocks, with chipmakers and chip-adjacent stocks logging strong gains on AI hype. Tech investor SoftBank Group Corp. (TYO:) rose 2.4% to a near three-year high, while chip testing equipment maker Advantest Corp. (TYO:) rose 1.6% and Tokyo Electron Ltd. (TYO:)- Japan’s most valuable chipmaker- added nearly 4%.
The broader fell 0.1%.
Data released earlier in the day showed Japan’s unexpectedly shrank in the December quarter, as private consumption was battered by high inflation and a weak yen. The reading showed Japan entering a technical recession after logging two straight quarters of GDP declines.
But the recession fueled bets that the Bank of Japan will further delay raising interest rates from ultra-low levels- a trend that heralds an extended period of easy monetary conditions for Japanese markets. This trend was a key driver of Japan’s stock rally over the past two years.
Tech Sector Strength Boosts Other Asian Markets
Other Asian markets also rose on strength in the tech sector. Hong Kong’s index added 0.5% as a Bloomberg report showed that Michael Burry- who had famously called the 2008 subprime mortgage crisis- increased his holdings of tech heavyweights JD.com (NASDAQ:) (HK:) and Alibaba Group (NYSE:) (HK:).
South Korea’s edged up 0.1%. Indonesian stocks were the best performers for the day, with the surging 1.3% after Defence Minister Prabowo Subianto appeared poised to win the country’s presidency.
Australia’s added 0.7% as data showed that the in January, which gives the Reserve Bank less impetus to hike interest rates further. But gains on the ASX were held back by a 2.3% drop in heavyweight miner BHP Group Ltd (ASX:), after it flagged a staggering $5.7 billion impairment charge on its Brazil operations and Australian nickel business.
Futures for India’s index pointed to a muted open, although local tech heavyweights appeared likely to track gains in their U.S. peers.
