Asian stocks gained on Wednesday in subdued Lunar New Year trading, following a recovery on Wall Street driven by tech stocks, as concerns over Chinese AI company DeepSeek dissipated, reports AP.
Most Asian markets were closed for the holiday. Investors were turning their attention to the Federal Reserve’s upcoming interest rate decision. U.S. futures showed little movement, and oil prices declined.
Tech stocks slide as Chinese rival threatens AI industry; Nvidia falls 17%
In Tokyo, the Nikkei 225 index rebounded from Tuesday’s losses, rising 1% to 39,414.78.
Australia’s S&P/ASX 200 climbed 0.6% to 8,447.00, following data from the Australian Bureau of Statistics that revealed a 0.2% rise in the Consumer Price Index for the December 2024 quarter, the smallest increase since the June 2020 quarter during the COVID-19 downturn.
India's Sensex gained 0.7%, while Thailand’s SET index dropped 0.2%.
On Tuesday, tech stocks bounced back after suffering a drop on Monday due to doubts about the sustainability of the AI investment boom.
The S&P 500 increased by 0.9% to 6,067.70, recovering more than half of its earlier losses. The Dow Jones Industrial Average added 0.3% to 44,850.35, and the Nasdaq composite surged 2% to 19,733.59 after falling 3.1% the previous day.
The focus remained on Nvidia, whose chips are central to the AI boom. The stock rose 8.8% after a nearly 17% drop on Monday, its worst plunge since the 2020 COVID crash.
Other AI-related companies also saw steadier performance, including Broadcom, which rose 2.6%. Constellation Energy gained 1.4% after a sharp 21% drop on Monday. The company had earlier surged due to expectations it would supply electricity to the growing AI data center industry.
Asian shares gain after S&P 500 climbs to a record and Bank of Japan raises rate
These revenue prospects were threatened when DeepSeek, a Chinese firm, claimed to have developed a large language model that can compete with U.S. rivals at a much lower cost. This raised doubts about the future demand for AI chips and electricity.
AI-related stocks had been Wall Street’s biggest performers in recent years, driven by the belief that AI spending would continue to rise. However, concerns have emerged that stock prices may have risen too quickly.
The impact of DeepSeek’s development on the AI industry remains unclear. While it could reduce growth in demand for data centers, electricity, and chips, it may stimulate growth in other sectors.
Later this week, major companies such as Apple, Meta Platforms, Microsoft, and Tesla are expected to report their earnings.
A U.S. report showing weaker-than-expected consumer confidence had minimal impact on the bond market. The key event of the day was the Federal Reserve’s interest rate decision, which is expected to leave the federal funds rate unchanged. If this holds, it would mark the first meeting since September without a rate cut aimed at stimulating the economy.
On Wednesday, U.S. benchmark crude oil fell by 8 cents to $73.69 per barrel. Brent crude, the international standard, lost 12 cents, to $76.37 per barrel.
In currency markets, the U.S. dollar dropped to 155.21 Japanese yen from 155.53 yen. The euro was valued at $1.0437, up from $1.0432.