Asian stock markets rebound higher, South Korean stocks close up 3.1%, SK Hynix rises over 5%, oil prices continue to fall, gold prices dip below 4000 again

The IPO filing of Anthropic has reignited market confidence in the artificial intelligence sector, with Asian tech stocks leading the gains. However, the diverging performance of US stock futures signals doubts about the sustainability of the rally. This week, the Federal Reserve’s rate decision and earnings from tech giants will serve as key tests for whether the AI trade can sustain its recovery.

Anthropic PBC’s submission of an IPO application became the main catalyst propelling global stock markets to extend gains on Tuesday. The Nikkei 225 closed up 1.7% at 63,268.37 points. Japan’s TOPIX ended 0.6% higher at 3,997.37 points. The Korean KOSPI closed up 3.1% at 5,638.35 points.

However, momentum appears to be weakening. Nasdaq 100 index futures slid slightly by 0.1%, while European markets also opened on a subdued note. At the same time, global benchmark Brent crude oil fell about 1% to around $114.70 per barrel, as high-level officials from multiple countries traveled to Tehran in efforts to restart diplomatic negotiations and contain further escalation in the Middle East.

In addition to Anthropic, large-scale financing activities in the tech sector are providing further support to market sentiment. Meta Platforms is seeking to raise up to $95 billion, Broadcom has arranged a $63 billion chip procurement financing deal, and SpaceX has signed an equipment financing lease agreement worth about $40 billion.

• The Nikkei 225 closed up 1.7% at 63,268.37 points. Japan’s TOPIX ended 0.6% higher at 3,997.37 points. The Korean KOSPI closed up 3.1% at 5,638.35 points.

• The yield on the US 10-year Treasury fell by 2 basis points to 4.97%.
• The yield on the 10-year Japanese government bond rose by 1 basis point to 2.790%.
• Brent crude oil fell about 1% to around $114.70 per barrel.
• Spot gold fell below $4,000/oz, down 0.4% on the day.

Anthropic has filed the long-awaited S-1 document, becoming the first major company focused on developing cutting-edge AI models to pursue a public listing. This filing comes after a significant pullback in the AI sector, triggered by concerns over overvaluation and sustained high capital expenditure. Investors are now scrutinizing the filing for signs of whether demand for AI remains robust.

Hideyuki Ishiguro, Chief Strategist at Nomura Asset Management, stated, “Anthropic’s IPO filing is expected to reignite market interest in the AI sector.” He pointed out that with current semiconductor valuations now fairly reasonable and technical signals improving, related sectors could stage a rebound in the short term.

Wall Street and institutional capital have also shown palpable enthusiasm. Rick Rieder, Chief Investment Officer of Global Fixed Income at BlackRock, told Bloomberg TV, “This is one of the most exciting periods for investing in my career. I spent the whole weekend reviewing these deals and took substantial positions in some of them.”

Despite the sustained frenzy in the AI sector, the rapid pace of capital inflows has generated some caution. As debt and equity financings continue to soar and as cutting-edge AI labs tend to exhibit significant cash burn, some analysts are concerned about the sustainability of this financing model.

The performance of the US Treasury market stands in contrast to the sentiment in tech stocks. This month’s selloff in AI-related shares, the French debt crisis, and ongoing tensions in the Middle East have combined to drive global funds into US Treasuries for safety. The yield on benchmark 10-year Treasuries has dropped more than 30 basis points since October, poised to end a seven-month winning streak, and slipped a further 2 basis points on Tuesday to 4.97%.

The Bloomberg Dollar Spot Index essentially extended its gains for a third trading session.

The market faces two major risk events this week. The Federal Reserve will announce its rate decision on Wednesday, with consensus expecting rates to remain unchanged after a hike in September. Current market pricing suggests only about a 10% chance of a hike at this meeting, but the probability of another hike before year-end now exceeds 70%.

Christopher Harvey, Head of Equity and Portfolio Strategy at CIBC, wrote in a research note, “This week is packed with earnings reports, which usually relegate macro factors to the background. However, the Fed’s rate meeting on Wednesday could turn into a fairly tricky and complex press conference, which cannot be ignored.”

As for tech giant earnings, Alphabet and Microsoft will release results on Wednesday, followed by Amazon and Intel on Thursday. Investors are focusing on the capital expenditure intentions of these largest buyers in the AI sector, and whether these investments can deliver returns that match their scale.

Jung In Yun, CEO of Fibonacci Asset Management Global, commented, “The key issue is whether this week’s results can restore market confidence in the sustainability of demand for AI. For this recovery to have lasting power, we need to see encouraging earnings guidance and signs of continued foreign capital inflows.”