Asian Markets Rally on US Rate Hopes, Tech Boosted by Chip Deal

Asian Markets Rally on Optimism for Rate Cuts and AI Momentum

Asian equities experienced a significant surge on Thursday, driven by optimism over potential interest rate cuts in the United States. This sentiment was fueled by data showing job losses in the US private sector, which overshadowed concerns about a partial government shutdown. The rally was further bolstered by a major deal between South Korea\’s leading chip companies and OpenAI, adding momentum to the ongoing artificial intelligence (AI) boom that has pushed markets to record highs.

Tech firms were at the forefront of the gains, with the AI-driven rally continuing to attract investors. The deal between OpenAI and South Korean giants Samsung and SK hynix provided a significant boost to regional tech stocks. During a visit to Seoul by OpenAI CEO Sam Altman, the two companies announced preliminary agreements to supply chips and other equipment for OpenAI\’s Stargate project. This development led to sharp increases in stock prices, with SK hynix rising around 12 percent and Samsung climbing approximately five percent. These gains helped the Kospi index reach a new record high.

Regional Market Performance

The positive momentum extended across various Asian markets. Tokyo, Sydney, Singapore, Wellington, and Jakarta all saw gains, while Hong Kong recorded more than a one percent increase as traders returned from a midweek break. Seoul and Taipei were particularly strong, with the TAIEX index in Taiwan jumping almost two percent. Chip giant TSMC contributed significantly to this rise, with its stock surging three percent.

Other regional tech firms also benefited from the overall market enthusiasm. Hong Kong-listed Alibaba, Tencent, and JD.com each rose between two and three percent. The broader trend reflects a growing investor appetite for AI-related assets, with hundreds of billions of dollars being invested in the sector this year.

Economic Indicators and Market Outlook

Despite the government shutdown in the United States, the focus remained on the outlook for Federal Reserve rate cuts. Recent economic data, including the ADP report showing a loss of 32,000 jobs in the private sector, reinforced the perception that the US labor market is slowing down. This has increased expectations for the Fed to cut rates twice more before the end of the year.

Analysts noted that the absence of the non-farm payrolls report due to the shutdown added to the uncertainty. Wellington Management\’s Brij Khurana pointed out that investors would need to rely on independent private sources to gauge the true state of the economy. He warned that if the administration proceeds with further layoffs, it could have a more significant economic impact than usual.

Bank of America economists highlighted several downside risks for labor demand, including job losses in goods-producing sectors and continued layoffs in professional and business services. They also mentioned the potential impact of recent government layoffs under the previous administration.

Key Financial Figures

As of around 0230 GMT, the following key financial figures were reported:

• Tokyo – Nikkei 225: Up 0.3 percent at 44,675.96
• Hong Kong – Hang Seng Index: Up 1.7 percent at 27,304.94
• Shanghai – Composite: Closed for a holiday
• Euro/dollar: Up at $1.1739 from $1.1728 on Wednesday
• Pound/dollar: Up at $1.3483 from $1.3476
• Dollar/yen: Down at 147.02 yen from 147.14 yen
• Euro/pound: Up at 87.07 pence from 87.04 pence
• West Texas Intermediate: Up 0.5 percent at $62.10 per barrel
• Brent North Sea Crude: Up 0.5 percent at $65.70 per barrel
• New York – Dow: Up 0.1 percent at 46,441.10
• London – FTSE 100: Up 1.0 percent at 9,446.43

Investors remain focused on the potential for further rate cuts and the continued growth of the AI sector, which is shaping the global financial landscape.