Asian equities rallied on Friday, following Wall Street’s overnight gains, as investors brushed aside initial concerns over Nvidia Corp.’s revenue outlook. Optimism in the markets persisted despite geopolitical tensions, mixed economic data, and ongoing uncertainties in the U.S. Treasury leadership race.
Asian Markets
Stock markets across Asia saw significant improvements. Australia’s S&P/ASX 200 gained 0.8%, Japan’s Topix rose by 0.6%, and Hong Kong’s Hang Seng index climbed 0.2%. China’s markets fluctuated, reflecting broader uncertainty after a 1% drop in an index of U.S.-listed Chinese stocks the previous day.
The rally came as U.S. equity futures held steady following a strong performance on Thursday, with the S&P 500 and Nasdaq 100 posting gains. Nvidia, a key driver of the tech sector, overcame early jitters about its revenue guidance to hit a new intraday record. The company’s reassurances about its product lineup and continued focus on artificial intelligence (AI) growth boosted investor confidence.
Taosha Wang, portfolio manager at Fidelity International, highlighted the appeal of U.S. markets, stating, “US exceptionalism remains a fairly strong backdrop in these market conditions.” Wang also pointed to the impact of AI advancements and the potential for growth-friendly policies under the Trump administration as supportive factors for U.S. equities. However, she noted that Chinese markets still need to see concrete policy-driven earnings improvements despite recent government stimulus measures.
Cryptocurrency Boom Fueled by Optimism
Bitcoin surged past $98,000, driven by expectations of favorable regulatory changes under the incoming Trump administration. Reports that Chris Giancarlo, a pro-crypto figure and former chairman of the Commodity Futures Trading Commission, was being considered for a “crypto czar” role further fueled the rally. Ethereum, however, dipped slightly, down 0.8% to $3,323.03.
The broader crypto market’s optimism aligns with a belief that a looser regulatory environment and institutional backing could propel the industry into a new growth phase.
Mixed Signals in Bond Markets and Interest Rates
Australian and New Zealand bonds remained stable, while U.S. Treasury yields climbed after labor market data suggested mixed economic conditions. The two-year yield increased by three basis points, reaching its highest level since July. Despite this, Austan Goolsbee, President of the Federal Reserve Bank of Chicago, expressed confidence that interest rates might trend lower as inflation aligns with the Federal Reserve’s objectives.
Adding to the uncertainty, U.S. jobless claims came in lower than expected, while continuing claims—a measure of long-term unemployment—hit a three-year high. This divergence underscored the ongoing complexities in interpreting the health of the U.S. labor market.
The upward pressure on yields bolstered the dollar, which rose against most major currencies on Thursday. The Japanese yen edged 0.1% higher on Friday, reflecting Japan’s inflation remaining above the central bank’s target.
Adani Controversy in Focus
In Asia, the fallout from a U.S. indictment against Gautam Adani sent ripples through markets. Shares of Adani Group companies tumbled after allegations of bribery led the conglomerate to cancel a $600 million bond sale. The company strongly denied the allegations, but investors are closely monitoring developments, given the potential ramifications for broader market confidence.
Singapore Upgrades Growth Forecasts
Singapore delivered a rare bright spot in the region as it revised its growth forecasts upward for 2024. Better-than-expected economic expansion in the third quarter, driven by a rebound in key sectors, provided optimism. The city-state’s recovery underscores its resilience amid global headwinds.
Geopolitical Tensions Boost Commodities
Geopolitical instability continued to cast a shadow over markets. Russia’s launch of a new ballistic missile into Ukraine intensified concerns about the conflict’s broader implications. These tensions supported gains in commodities, with West Texas Intermediate crude rising 0.3% to $70.31 per barrel and gold climbing for a fifth consecutive session to $2,677.26 per ounce.
Themis Themistocleous, Chief Investment Officer for EMEA at UBS Wealth Management, remarked, “Geopolitics always has a potential of introducing volatility in the market…we have been advising clients to include oil or its derivatives in their portfolios to hedge against potential volatility.”
U.S. Market Sentiment Ahead of Thanksgiving
As the Thanksgiving holiday approaches, analysts at Fundstrat projected a continued rally in U.S. stocks. “The Nvidia earnings report leaves the likelihood of a Thanksgiving rally intact,” they wrote. Although the market’s immediate reaction to Nvidia’s results was mixed, the company’s strong AI trajectory remains a pivotal factor for investor sentiment.
The ongoing debate over who will lead the U.S. Treasury also drew attention. With three frontrunners—Scott Bessent, Marc Rowan, and Kevin Warsh—investors are eager for clarity on the administration’s economic direction. BMO’s Ian Lyngen noted that the narrowed field may reduce some of the market’s anxiety.
Market Indicators
- Stocks:
- S&P 500 futures: Unchanged
- Japan’s Topix: +0.6%
- Australia’s S&P/ASX 200: +0.8%
- Hong Kong’s Hang Seng: +0.2%
- Shanghai Composite: Little changed
- Euro Stoxx 50 futures: +0.4%
- Currencies:
- Bloomberg Dollar Spot Index: Little changed
- Euro: $1.0473 (unchanged)
- Japanese yen: +0.1% to 154.37 per dollar
- Offshore yuan: 7.2556 per dollar (unchanged)
- Cryptocurrencies:
- Bitcoin: +0.3% to $98,392.51
- Ether: -0.8% to $3,323.03
- Bonds:
- 10-year U.S. Treasury yield: 4.41% (unchanged)
- Japan’s 10-year yield: 1.090% (unchanged)
- Australia’s 10-year yield: -2 basis points to 4.56%
- Commodities:
- WTI crude: +0.3% to $70.31 per barrel
- Spot gold: +0.3% to $2,677.26 per ounce
Investors remain cautiously optimistic as markets navigate a complex web of economic signals, geopolitical tensions, and regulatory developments. While risks remain—particularly in light of geopolitical instability and potential market disruptions—positive corporate earnings and resilience in key sectors continue to drive sentiment.
