Asian shares rose predominantly on Tuesday, buoyed by a rally in technology stocks on Wall Street, notably led by Nvidia. This optimism, however, was slightly tempered by mixed performances across regional markets.
Japan’s benchmark Nikkei 225 led the regional rally, jumping 2.4% to 40,248.68 in morning trading. This significant surge reflected strong investor sentiment towards the technology sector, which has been the driving force behind recent market gains. Australia’s S&P/ASX 200 also edged up 0.3% to close at 8,279.30, while South Korea’s Kospi gained nearly 1.0%, finishing at 2,513.39.
In contrast, Hong Kong’s Hang Seng index saw a slight decline, slipping 0.3% to 19,635.67, and the Shanghai Composite remained virtually unchanged, inching down less than 0.1% to 3,205.55.
Nippon Steel’s shares fell 1.5% in Tokyo trading following news that the Biden administration had blocked its nearly $15 billion bid to acquire U.S. Steel. Despite the setback, Nippon Steel’s CEO vowed to continue pursuing the deal, emphasizing the strategic importance of the acquisition.
The legal tussle escalated as U.S. Steel saw an 8.1% rise overnight. Both companies have filed a federal lawsuit challenging President Joe Biden’s decision, claiming the block was politically motivated. Japanese officials have criticized the decision, arguing that there is insufficient evidence to suggest the merger poses a national security threat.
Wall Street showed signs of recovery from its recent holiday-season slump. The S&P 500 gained 0.6% for the second consecutive day, following a streak of five losses. The Dow Jones Industrial Average, however, gave up an early gain to dip slightly by 25 points, or 0.1%, while the Nasdaq composite surged by 1.2%.
Technology stocks, particularly those involved in artificial intelligence, were at the forefront of this rally. Nvidia’s shares climbed 3.4%, hitting a new record ahead of CEO Jensen Huang’s anticipated speech at the CES convention in Las Vegas.
Despite concerns of an overheating tech sector and fears of a potential bubble, investor enthusiasm remains robust. Nvidia’s success reflects broader optimism about the transformative potential of AI technology, with other tech giants also enjoying gains.
In corporate news, Uber Technologies saw its shares rise by 2.7% after announcing an accelerated buyback of $1.5 billion worth of its own stock. This move is part of a larger $7 billion repurchase program aimed at enhancing shareholder value.
The S&P 500 added 32.91 points to close at 5,975.38. The Dow Jones Industrial Average slipped by 25.57 points, ending at 42,706.56, and the Nasdaq composite jumped 243.30 points to reach 19,864.98.
The New York Stock Exchange and Nasdaq will close on Thursday to honor a National Day of Mourning for former President Jimmy Carter. Market watchers are eyeing the release of the Federal Reserve’s minutes from its latest policy meeting later this week. The Fed recently cut its main interest rate for the third consecutive time, and investors are keen to glean insights into its future policy direction.
Looking ahead, the monthly jobs report and an update on U.S. consumer sentiment are due on Friday. The U.S. economy has shown remarkable resilience, despite global uncertainties. The Federal Reserve’s rate cuts, initiated in September, have aimed to counter inflation, which is nearing the Fed’s 2% target. However, achieving the final percentage point in inflation reduction may prove challenging.
Concerns are rising that policies under the incoming Trump administration could exert upward pressure on inflation. This has led to worries about prolonged higher interest rates. The yield on the 10-year Treasury rose slightly to 4.61%, reflecting these anxieties.
In energy markets, U.S. benchmark crude oil prices fell by 33 cents to $73.23 per barrel, while Brent crude, the global standard, dropped 28 cents to $76.02 per barrel.
Currency markets saw the U.S. dollar strengthen against the Japanese yen, rising to 158.29 yen from 157.58 yen. The euro dipped slightly to $1.0381 from $1.0392, indicating a marginal shift in investor preferences towards the greenback amid ongoing global economic uncertainties.
