The Nikkei share average in Japan reached a new record high following unexpectedly robust revenue forecasts from U.S. chip designer Nvidia, boosting tech stocks across Asia. However, enthusiasm was tempered by challenges in Chinese stock markets, which struggled to maintain multi-month highs despite stimulus measures from Beijing. Meanwhile, long-term U.S. bond yields remained near three-month peaks, and the dollar weakened after minutes from the Federal Open Market Committee meeting indicated a cautious approach to interest rate adjustments, aligning with the Fed's previously stated stance.
The Nikkei 225 share average surged by up to 2%, reaching 39,029.00 and surpassing the previous all-time high of 38,957.44, which was set on December 29, 1989, during the peak of Japan's so-called bubble economy. MSCI's broadest index of Asia-Pacific shares, excluding Japan, increased by 0.29%, with Taiwan's stock benchmark rising by 0.69%. The Hang Seng index recovered from earlier losses, gaining 0.17% and potentially extending its seven-day winning streak. Mainland blue chips fluctuated throughout the session but ended up 0.29% higher after experiencing minor gains and losses.
U.S. stock index futures indicated strong gains after a mixed session for the main benchmarks. S&P 500 futures surged by 0.7%, while Nasdaq futures, which focus on tech stocks, jumped by 1.4%. After the closing bell, Nvidia announced a forecast of approximately a 233% increase in quarterly revenue, leading to a 10% surge in its shares during after-hours trading. So far this year, the Nikkei has risen by approximately 16.5%, while the S&P 500 and Nasdaq have each rallied by around 5%. This growth has been largely driven by high expectations for artificial intelligence (AI), with Nvidia's chips playing a central role in this burgeoning sector.
During Asian trading hours, the 10-year U.S. Treasury yield slightly declined to 4.3009%, although it remained near the 4.332% level recorded a week prior, which had not been observed since the end of November. The majority of policymakers at the U.S. Federal Reserve's January meeting expressed concerns about the potential drawbacks of reducing interest rates prematurely, reflecting widespread uncertainty regarding the appropriate duration for maintaining current borrowing costs.
This further solidified traders' belief that a rate cut is not on the immediate horizon, as market pricing indicates a one in three chance of the first reduction occurring in May, according to CME Group's FedWatch Tool. The dollar continued its retreat from the three-month peak reached last week when the U.S. dollar index, which monitors the currency against six major counterparts, hit 104.97. It experienced a slight decline, trading at 103.96 in the early session. Meanwhile, the euro saw a minor increase to $1.0823, while the yen slightly decreased to 150.41 per dollar.