Asian Markets Rise as AI Frenzy Boosts Stocks; US Futures Lower, Oil Prices Gain

Asian markets experienced gains on Thursday, driven by the ongoing frenzy surrounding artificial intelligence (AI) technology that continues to push stocks higher. In Tokyo, the Nikkei 225 index rose by 0.6% to reach 38,703.51. Meanwhile, the Hang Seng in Hong Kong edged up by 0.1% to 18,437.17, and the Shanghai Composite index dropped by 0.2% to 3,059.31. Australia’s S&P/ASX 200 also saw a gain of 0.7% to reach 7,822.00, following data from the Australian Bureau of Statistics that revealed a rebound in the country’s trading surplus in April, despite a decline of 2.5% in exports and 7.2% in imports.

Taiwan’s Taiex witnessed a surge of 1.9%, although contract electronics maker Foxconn’s shares dropped by 1.6%, despite reporting a record-high revenue increase of 22.1% year-on-year in May. In India, the Sensex added 0.8% after the Prime Minister secured a majority in parliament during the national elections. Conversely, the SET in Bangkok experienced a 0.2% loss. South Korea’s markets were closed for a holiday.

On Wednesday, Wall Street achieved record highs, with the S&P 500 climbing 1.2% to 5,354.03, reaching the top of its previous all-time high set two weeks ago. The Nasdaq composite also jumped by 2% to 17,187.90, setting a new record. The Dow Jones Industrial Average, which has a lesser emphasis on tech stocks, lagged behind with a gain of 0.2% to 38,807.33. The rally pushed the total market capitalization of AI poster child Nvidia above $3 trillion for the first time. Nvidia, whose chips power much of the AI boom, saw its shares rise by 5.2%, bringing its gain for the year to over 147%. The company joined Microsoft and Apple as the only U.S. stocks to ever surpass $3 trillion in total value. Apple regained this milestone valuation after a 0.8% increase on Wednesday.

The gains in tech stocks helped offset a 4.9% drop for a major retailer, which met profit expectations but fell slightly short on revenue. The retailer also announced its consideration of selling or spinning off its Family Dollar business. The broader retail industry has been facing challenges due to high inflation, particularly affecting lower-income U.S. households.

Treasury yields in the bond market fell following mixed data on the economy. One report indicated that real estate, healthcare, and other businesses in the U.S. services sector returned to growth in May, surpassing economists’ forecasts. Additionally, the report from the Institute for Supply Management revealed that prices rose at a slower pace in May compared to the previous month. Another report suggested that hiring at U.S. employers outside the government slowed more than expected. Recent reports indicating a potential slowdown in the U.S. economy due to high interest rates have made Wall Street hopeful for rate cuts by the Federal Reserve, as it could help lower inflation. However, there is also concern that an overshoot could lead to a recession, which would ultimately impact stock prices.

Treasury yields dropped as the weaker-than-expected economic reports raised expectations for future rate cuts by the Federal Reserve. The 10-year Treasury yield fell to 4.29% from 4.33% on Tuesday and 4.60% a week ago. The next significant move for Treasury yields and Wall Street overall may come on Friday when the U.S. government releases its monthly jobs report. Economists anticipate a slight pickup in overall hiring, with hopes that the job market will slow its growth without leading to widespread layoffs.