Markets mostly rose on Friday as traders extended their buying at the end of a healthy week in Asia, where tech firms rallied on a reassessment of AI investments.
After surging for the past two years on a rush into all things linked to artificial intelligence, Wall Street’s Magnificent Seven tech titans have been slow out of the blocks this year amid concerns about extended valuations and profitability.
Worries about the impact of new tools that many warn pose a risk to a range of companies were compounded by a Sunday report that identified parts of the global economy that could be at risk from the new gadgets, including credit card and food delivery firms.
That uncertainty has seen a shift from “downstream” companies that run apps and software to “upstream” firms such as chipmakers, many of which are based in Asia.
That was highlighted this week by another Wall Street sell-off, despite Nvidia reporting quarterly profits more than doubled and projecting strong growth for the coming period.
Analysts said the losses showed firms needed to far exceed even elevated forecasts, making it even harder to please investors who have been piling into tech in recent years.
“Market expectations were already very elevated and part of the positive results had been priced in,” said City Index’s Julian Pineda.
“There are also concerns related to stretched valuations and Nvidia’s dependence on capital spending by large technology companies investing in AI infrastructure.
“If the pace of AI investment moderates due to cost optimisation efforts, it could indirectly affect Nvidia’s growth outlook.”
Most of Wall Street fell, with the Nasdaq shedding more than one per cent.
Asia started off mixed but went into the home straight on a broadly positive note, with the Supreme Court’s decision last Friday to slap down many of US President Donald Trump’s tariffs seen largely benefiting regional economies.
Tokyo, Hong Kong, Shanghai, Sydney, Singapore, Bangkok and Wellington all advanced.
But Seoul sank one per cent, having chalked up gains of more than eight per cent this week thanks to a surge in market heavyweights Samsung and SK hynix.
Manila, Mumbai and Jakarta also slipped.
London opened higher, Paris fell, and Frankfurt was flat.
The yen extended a minor recovery against the dollar after a top Bank of Japan board member again urged officials to continue hiking interest rates.
However, the case for a pause was boosted by data showing Tokyo’s inflation — seen as a barometer for the country — cooled last month.
The currency came under pressure this week after Prime Minister Sanae Takaichi nominated two academics to the BoJ board who are considered policy doves, days after reports said she had told its boss Kazuo Ueda of her concern about tightening further.
Oil prices rose as investors kept tabs on Iran’s nuclear talks between Washington and Tehran.
Mediators said the two sides had made “significant progress” in talks Thursday in Switzerland as they look to avert a war in the crude-rich Middle East. Officials agreed to further discussions next week in Austria.
The Oman-mediated negotiations follow repeated threats from Trump to strike Tehran, with the US president last Thursday giving it 15 days to reach a deal.
– Key figures –
Tokyo – Nikkei 225: UP 0.2 per cent at 58,850.27 (close)
Hong Kong – Hang Seng Index: UP 1.0 per cent at 26,630.54 (close)
Shanghai – Composite: UP 0.4 per cent at 4,162.88 (close)
London – FTSE 100: UP 0.2 per cent at 10,867.49
Dollar/yen: DOWN at 156.03 yen from 156.11 yen on Thursday
Euro/dollar: UP at $1.1818 from $1.1799
Pound/dollar: UP at $1.3493 from $1.3489
Euro/pound: UP at 87.59 pence from 87.47 pence
West Texas Intermediate: UP 0.8 per cent at $65.75 per barrel
Brent North Sea Crude: UP 0.7 per cent at $71.22 per barrel
New York – Dow: UP less than 0.1 per cent at 49,499.20 (close)
AFP
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