The rally in technology stocks on Wall Street, triggered by Anthropic PBC's initial public offering application, spread to Asian markets, reviving enthusiasm for AI-related investments after recent pressures. Crude oil prices continued their decline.
South Korea’s Kospi index, a gauge of AI-related trading, rose 3.3%, with shares of chip giants SK Hynix and Samsung Electronics climbing. Semiconductor stocks in Japan also gained, helping the broader MSCI Asia Pacific index rise 0.7%. Taiwanese stocks declined.
Beyond Anthropic, funding in the technology sector was the main driver of investor sentiment, with Meta Platforms seeking to raise up to $95 billion. Broadcom arranged a $63 billion deal to finance chip purchases, while SpaceX signed a lease agreement to finance equipment worth nearly $40 billion.
In other markets, Brent crude, the global benchmark for oil, fell 1% to around $114.70 a barrel, after senior officials from several countries traveled to Tehran in an attempt to revive talks aimed at preventing a wider escalation in the Middle East.
Anthropic's IPO will be a key test of investor appetite for AI companies, after recent concerns about high valuations and massive spending triggered a sell-off in chip stocks.
Investors are also gearing up for the Federal Reserve's interest rate decision on Wednesday, and earnings reports from the world's largest companies by market capitalization this week, which will provide new indications about the outlook for AI-related trading.
Hideyuki Ishiguro, chief strategist at Nomura Asset Management, said that Anthropic's IPO filing is expected to reignite interest in the AI sector. He added that semiconductor stocks are poised for a near-term recovery, given their low valuations and improving technical indicators.
AI funding is driving the recovery of Asian markets.
In other parts of the market, the yield on China's five-year government bonds fell to a record low after the central bank increased the injection of cash into the banking system.
A Bloomberg index that measures the strength of the dollar held onto gains from the previous two sessions. US Treasury bonds posted modest gains.
Anthropic submitted its long-awaited S-1 filing, moving closer to becoming the first publicly traded company focused primarily on developing advanced artificial intelligence models. Investors are scrutinizing the prospectus for signs of demand for AI, following weeks of uncertainty surrounding related trading.
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Wall Street is racing against time to fund the enthusiasm surrounding artificial intelligence , which includes a surge in demand for chips and data centers to provide the computing power needed to support this technology.
However, the high levels of sector financing through debt and equity, coupled with the depletion of cash reserves in advanced AI model development labs, have raised concerns that some of this financing may not be sustainable.
“This is one of the most exciting periods of investing I’ve ever seen,” said Rick Rieder, BlackRock’s global chief investment officer for fixed income, in an interview with Bloomberg Television. “I spent the entire weekend looking at some of these deals, and getting fairly significant participation in some of them.”
The results test the sustainability of the AI stock market recovery.
The recovery of AI-related trading faces a test later this week, when some of the biggest spenders on the technology report their earnings.
Alphabet and Microsoft are scheduled to announce their results on Wednesday, followed by Amazon.com and Intel on Thursday. Investors will be watching these companies' spending plans and, more importantly, whether their investments are generating sufficient returns.
Jong-In Yoon, CEO of Fibonacci Asset Management Global, said: “The key question is whether this week’s results can restore confidence in the sustainability of AI-related demand.” He added: “For the recovery to continue, we need reassuring earnings forecasts and continued buying from foreign investors.”
The Federal Reserve also presents another key test, as policymakers are widely expected to leave interest rates unchanged after raising them in September. Markets are pricing in a roughly 10% probability of a rate hike on Wednesday, compared to a greater than 70% probability of an increase by the end of the year.
Christopher Harvey, head of equity and portfolio strategy at CIBC, wrote in a note: “With so many companies reporting earnings this week, we would normally say that macroeconomic factors would take a backseat to individual company results. But we have the Federal Reserve meeting on Wednesday, and what could be a very difficult and complicated press conference.”
