The Asian stock markets surged on Wednesday, bolstered by a tech-driven recovery on Wall Street and diminishing panic over the Chinese AI firm, DeepSeek. The Lunar New Year holiday resulted in limited trading, yet the focus of investors was on the forthcoming Federal Reserve's decision concerning interest rates.
Many Asian markets were closed, yet those operating saw positive momentum. In Tokyo, the Nikkei 225 index managed to recover from prior losses, showing a 0.7% increase to reach 39,273.49. Similarly, Australia’s S&P/ASX 200 gained 0.7% to hit 8,455.70, buoyed by inflation data revealing a mere 0.2% rise in the Consumer Price Index for the last quarter of 2024, marking the smallest increment since mid-2020.
India's Sensex edged up by 0.5%, while the SET index in Bangkok saw a slight decline of 0.2%. On the global front, tech stocks in the U.S. rebounded robustly on Tuesday, reversing the prior day’s downturn driven by skepticism about the AI investment boom. The S&P 500 increased by 0.9% to 6,067.70, while the Dow Jones Industrial Average rose by 0.3% to 44,850.35. Notably, the Nasdaq composite saw a 2% rise, recovering from a steep drop earlier in the week.
The tech giant Nvidia led the charge with a substantial 8.8% jump after a significant plunge on Monday. Other AI-focused companies, such as Broadcom, also saw a recovery, with shares up by 2.6%. Constellation Energy, which had been predicted to supply the energy needs for AI data centers, rebounded by 1.4% following a sharp decline.
The fears over AI expenditure were sparked by DeepSeek's announcement of a cost-effective language model, capable of rivaling its larger U.S. counterparts, raising doubts about the anticipated AI investment in data centers and electricity. This development poses questions on the future trajectory of AI stock trading.
According to James Egelhof, chief U.S. economist at BNP Paribas, a decrease in AI costs could accelerate its adoption across industries, potentially increasing software investments to counterbalance reduced hardware spending.
Attention is now turning towards the Federal Reserve, which is anticipated to announce its decision on interest rates. Speculations suggest no change in the federal funds rate, marking the first non-cut since rate reductions began in September. Such stability could influence economic strategies moving forward.
Meanwhile, leading U.S. tech firms including Apple, Meta Platforms, Microsoft, and Tesla are set to release their earnings reports this week. These reports could redefine investor confidence amid fluctuating consumer sentiment, as reported earlier.
In commodity trading, benchmark U.S. crude oil prices fell by 14 cents to $73.63 per barrel, with Brent crude following suit with an 18 cents decrease, priced at $76.31 per barrel. Currency markets also reflected volatility, with the U.S. dollar experiencing a slight drop against the yen and euro.
