AI Stocks Rally & Fed Rate Bets Hit Bonds - Asia Market Wrap
Global stocks advanced as renewed enthusiasm for AI outweighed concerns that hotter-than-expected US inflation could prompt further Fed rate hikes. Nasdaq 100 futures rose 1.5%, recovering Tuesday’s regulatory-driven losses, while S&P 500 futures gained 0.6%. European equity futures also pointed higher, and the MSCI Asia Pacific Index climbed 1.6% following its strongest two-day performance in more than three months, with tech leading gains. The AI trade gained support from an upbeat outlook by CoreWeave and growing anticipation surrounding Anthropic’s potential IPO. Bankers for the Claude chatbot maker are reportedly considering an initial valuation of $1.5 trillion or more, reflecting strong investor demand. Separately, OpenAI’s quarterly revenue reportedly exceeded $10 billion for the first time, further reinforcing optimism around AI investment. Treasuries remained under pressure after stronger-than-expected US inflation fueled expectations of additional Fed tightening. Two-year Treasury yields surged 17 bps on Tuesday, their biggest increase in 19 months. Money markets are now pricing a 25 bps Fed hike next month, with some probability of a larger increase. Oil prices rebounde
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Global stocks advanced as renewed enthusiasm for AI outweighed concerns that hotter-than-expected US inflation could prompt further Fed rate hikes. Nasdaq 100 futures rose 1.5%, recovering Tuesday’s regulatory-driven losses, while S&P 500 futures gained 0.6%. European equity futures also pointed higher, and the MSCI Asia Pacific Index climbed 1.6% following its strongest two-day performance in more than three months, with tech leading gains. The AI trade gained support from an upbeat outlook by CoreWeave and growing anticipation surrounding Anthropic’s potential IPO.
Bankers for the Claude chatbot maker are reportedly considering an initial valuation of $1.5 trillion or more, reflecting strong investor demand. Separately, OpenAI’s quarterly revenue reportedly exceeded $10 billion for the first time, further reinforcing optimism around AI investment. Treasuries remained under pressure after stronger-than-expected US inflation fueled expectations of additional Fed tightening. Two-year Treasury yields surged 17 bps on Tuesday, their biggest increase in 19 months.
Money markets are now pricing a 25 bps Fed hike next month, with some probability of a larger increase. Oil prices rebounded after two consecutive sessions of declines as traders assessed prospects for an end to the US-Iran conflict. Brent crude climbed back above $92 per barrel, while the Dollar edged lower after gaining 0.5% on Tuesday.