Asian equities experienced a surge on Thursday, with MSCI's Asia Pacific index gaining 0.6% in early trade. South Korea's Kospi index, a key indicator for AI-linked investments, led regional gains, jumping 2.22%, while Japan's Nikkei 225 rose 0.41% and the broader Topix index added 0.32%. This rally was primarily fueled by Nvidia's upbeat sales forecast, which reassured investors about the sustained strength of spending on AI infrastructure, easing concerns about a potential slowdown in the sector's investment boom. Meanwhile, the Japanese yen held steady at 159.19 per dollar, and the offshore yuan remained largely flat at 6.7210 per dollar.
Nvidia's shares had surged 4.2% in extended US trading after the chipmaker projected robust sales growth through 2028, leading to an 8.7% rise on Thursday. This positive outlook also boosted related companies like Marvell Technology and SanDisk. In the US, futures indicated a higher open, with Nasdaq 100 Index contracts up 1.2% and S&P 500 futures adding 0.6%. Despite these gains, investors remained watchful of whether substantial AI-related spending would consistently translate into earnings growth, especially after a period of volatility for technology shares. On Wall Street, the S&P 500 increased 0.7%, the Dow Jones Industrial Average added 0.2%, and the Nasdaq composite climbed 1.6%.
Bond markets, however, displayed caution as traders increased the likelihood of a Federal Reserve interest-rate hike this year. This sentiment followed a US inflation measure that stayed above the central bank's target. Short-dated Treasuries lagged in US trading, and the dollar strengthened, with money markets now fully pricing in a rate hike by December. The broader Personal Consumption Expenditures (PCE) gauge climbed 3.7% year-on-year, significantly above the Fed's 2% goal, which contributed to signs of a slowing US economy in July and strengthened the case for the central bank to maintain current rates. Investors are keenly awaiting Federal Reserve Chair Kevin Warsh's keynote speech at the Jackson Hole symposium on Friday for insights into the Fed's strategy on inflation and interest rates. Brent crude extended its slide to around $87.20 a barrel, and West Texas Intermediate fell 0.7% to $81.67 a barrel, as diplomatic progress in West Asia balanced tensions between Russia and Ukraine.
