Global Market Today: Asian stocks advance as selloff in chips eases
The MSCI Asia Pacific Index advanced 0.6%, led by stocks in South Korea. Chip stocks rose with Samsung Electronics Co. and SK Hynix Inc. both edging higher. Earlier, the S&P 500 erased losses and edged up to close 0.3% higher on Thursday.
A tone of caution prevailed as contracts for US benchmarks edged lower in early Asian trading. Futures for the Nasdaq 100 Index fell 0.5%. On Thursday, American depositary receipts of Taiwan Semiconductor Manufacturing Co. fell 1.8% after its upbeat outlook failed to quash AI buildout concerns.
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Treasuries rallied on haven demand driven by this week’s sharp swings in global stocks and credit markets. The yield on the benchmark 10-year fell 13 basis points to 5.06% in the New York session. Treasury futures edged higher on Friday with Federal Reserve Chairman Kevin Warsh set to speak in a fireside chat with IMF Managing Director Kristalina Georgieva in Bangkok.
Indonesian stocks will be in focus after the country faced a potential ejection from global stock indexes. Traders will also monitor Chinese markets with the European Union preparing to create new trade powers that could completely shut off access to its single market as part of a dramatic new push to cut the trade deficit with China.
Attention now turns to whether the rebound in equities can broaden after the selloff exposed growing unease over the heavy concentration of gains in AI-linked stocks. Signs of a rotation into other parts of the market may offer equities a firmer footing after months in which technology shares dominated returns.“After a strong run in AI stocks the past few months, value shares got way too cheap, while tech got quite expensive amid the artificial-intelligence frenzy,” said Brian Frank, president and portfolio manager at Frank Funds. “We’re still looking for companies that have good credit and trade at discounts in case growth or consumer spending ebbs on sticky inflation.”
There were already signs of a broader shift on Wall Street. An equal-weighted version of the S&P 500 Index climbed 1.4%, with healthcare and consumer-staples shares leading gains.
The pressure on chip stocks eased after Nvidia Corp. Chief Executive Officer Jensen Huang defended the financial health of AI computing supplier CoreWeave Inc. The company’s shares rose 4%, after a 12% tumble in the previous session. The Philadelphia Semiconductor Index pared its losses to less than 1%, having earlier fallen as much as 4.4%.
“CoreWeave’s strength is improving every day,” Huang told Bloomberg at an event Thursday in Stockholm. “I’m optimistic. Their cost of capital is actually decreasing.”
In other corners of the market, the dollar weakened, while gold climbed in the last session. US crude oil edged lower on Friday to about $97.50 a barrel.
Meanwhile, questions over the durability of the AI investment boom are spilling into credit markets as investors scrutinize the debt financing the infrastructure buildout.
A measure of CoreWeave’s credit risk climbed to an all-time high Thursday as some of its high-yield bonds extended declines.
On Warsh, traders will look for clues on whether Fed officials are leaning toward another rate increase. Last month, Fed officials lifted borrowing costs for the first time since 2023 and futures now imply about a 25% chance of a rate hike in October.
“On balance, we think Warsh will talk in a way that does not suggest an October hike,” said Krishna Guha at Evercore. “Warsh will be mindful of the global wobble in tech stocks and signs financing conditions are tightening for more exposed AI names, on top of the prior move up in longer-term yields.”
