BY COMFORT OGBONNA
Asian stock markets rallied on Wednesday, following Wall Street’s record-setting performance as strong corporate earnings and renewed enthusiasm for technology companies boosted investor confidence. Falling oil prices and declining bond yields also supported sentiment as markets reacted to signs of possible progress toward easing tensions in the Middle East.
Japan’s Nikkei index jumped 3.5%, helped by continued investment in artificial intelligence-related technologies and expectations that companies will maintain heavy spending on AI infrastructure. South Korea’s benchmark index also extended its recent swings, rising 4.3%, while broader regional markets recorded strong gains.
The MSCI index tracking Asia-Pacific shares outside Japan climbed 2.3%, while China’s blue-chip index advanced 1.5% as investors responded positively to the broader improvement in global risk appetite.
Technology stocks remained at the center of market activity, driven by expectations that artificial intelligence will continue to reshape industries and generate significant business growth. However, some major technology companies faced pressure as investors became increasingly concerned about the enormous costs required to expand AI capabilities.
Advanced Micro Devices shares declined after-hours despite reporting stronger-than-expected earnings, as investors viewed the results as insufficient compared with extremely high expectations surrounding the artificial intelligence sector. SpaceX also experienced a sharp decline after concerns grew that its aggressive investment plans could place pressure on cash flow.
Analysts said the cost of computing power, infrastructure expansion and continued capital spending remains a major concern for many AI-related companies. Investors are increasingly focused on how businesses will finance their growth plans while maintaining profitability.
SpaceX’s upcoming employee share sale is expected to be another important test for investor confidence, with hundreds of millions of shares held by employees and early stakeholders becoming eligible for trading.
U.S. stock futures remained relatively stable after major indexes reached record highs in the previous session. Futures linked to the S&P 500 rose slightly, while European markets also pointed to a positive opening, with gains expected for major indexes including Germany’s DAX and the broader European market.
Market sentiment was further supported by declining oil prices after Qatar said diplomatic efforts were making progress toward resolving the conflict involving the United States and Iran. Although details remained limited, investors interpreted the developments as a potential reduction in risks to global energy supplies.
Brent crude prices fell 0.6% to $78.85 a barrel, well below their July peak of $102. U.S. crude prices also declined, falling 0.9% to $75.09 a barrel.
Energy analysts said shipping data suggested oil flows through the Strait of Hormuz had been more resilient than initially expected despite the ongoing conflict. Some estimates indicated that shipments had recovered to a significant portion of pre-conflict levels, raising the possibility of increased global supply if the waterway fully reopens.
Lower oil prices helped ease concerns about inflation and supported global bond markets. The yield on 10-year U.S. Treasury notes declined to 4.603%, down from last week’s high of 4.747%, as investors reduced expectations for further interest-rate increases.
Market pricing showed the likelihood of a Federal Reserve rate increase in September falling to about 57%, compared with 67% previously. However, some central bank officials continued to emphasize the need for caution on inflation. Kansas City Federal Reserve President Jeff Schmid said additional policy tightening may still be required to bring inflation back toward the central bank’s 2% target.
Currency markets remained mostly stable. The New Zealand dollar slipped 0.3% after data showed unemployment reached a decade high of 5.6% in the second quarter.
The euro was little changed at $1.1537, remaining close to a recent six-week high, while the U.S. dollar weakened slightly against the Japanese yen, trading near 157.63. Traders continued monitoring the possibility of further intervention by Japanese authorities to support the yen.
Recent comments from U.S. officials expressing confidence in Bank of Japan Governor Kazuo Ueda’s approach increased expectations that Japan could continue raising interest rates. Japan and the United States recently carried out coordinated action aimed at supporting the yen after its prolonged decline.
In commodity markets, falling bond yields helped support gold prices, with the precious metal rising 1.6% to $4,140 an ounce as investors continued to seek protection against economic and geopolitical uncertainty.
Global markets remain focused on upcoming economic data, central bank decisions, corporate earnings and developments in the Middle East as investors assess the outlook for growth, inflation and financial conditions.
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