Asian markets opened higher on Wednesday, tracking Wall Street’s rally driven by renewed enthusiasm around artificial intelligence. Nvidia’s announcement of $500 billion in AI chip bookings and plans to build seven U.S. supercomputers, alongside Microsoft’s 27% stake in OpenAI’s new public benefit structure, sent U.S. indexes to record highs overnight.
Japan’s Nikkei hit another record, while South Korea’s Kospi also reached all-time highs on upbeat results from SK Hynix, a key Nvidia supplier. The MSCI Asia-Pacific ex-Japan index rose 0.16%, reflecting widespread optimism.
Why It Matters:
The rally underscores how AI continues to dominate global market sentiment, driving both investor confidence and corporate valuations. Yet, expectations are running high ahead of quarterly reports from Microsoft, Alphabet, and Meta results that could determine whether the AI-fueled momentum is sustainable or nearing bubble territory.
At the same time, attention is fixed on the U.S. Federal Reserve’s rate decision, with traders almost fully pricing in a 25-basis-point cut. Hints of an end to quantitative tightening (QT) could signal a dovish policy shift and provide further tailwinds to equities.
Investors: Positioning for a dovish Fed stance and strong tech earnings, though wary of overvaluation.
Analysts: “The bar for disappointment is high,” said Charu Chanana of Saxo, noting markets want proof of sustained AI monetisation beyond hype.
Central Banks: The BOJ is expected to hold rates but may hint at normalization to counter yen weakness. The RBA faces renewed inflation pressure, ruling out near-term cuts.
Currencies: The dollar weakened ahead of the Fed meeting; the yen firmed 0.3% to 151.66 per dollar.
What’s Next:
All eyes are on Wednesday’s Fed decision and tech mega-cap earnings for cues on the next market leg. A dovish tone from the Fed could extend the rally, while any hint of caution or weaker-than-expected AI earnings might trigger sharp corrections.
The Bank of Japan meets Thursday, potentially laying the groundwork for a December or January rate hike, while oil markets remain volatile amid new U.S. sanctions on Russian producers and possible OPEC+ output moves.
With information from Reuters.
