Asian shares near record high on AI optimism, dollar up on receding Fed cut bets

[SINGAPORE] Asian stocks advanced on Friday as the artificial intelligence boom regained momentum, while the dollar held near a six-week high after upbeat US economic data left traders trimming bets on rate cuts there.

Oil prices were nursing losses and safe-haven gold and silver fell after US President Donald Trump adopted a wait-and-see posture towards the unrest in Iran, having earlier threatened intervention.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.5 per cent and hovered near a record high hit in the previous session, as stellar results from Taiwanese chipmaker TSMC breathed new life into the AI trade.

The US and Taiwan also clinched a trade deal on Thursday that cuts tariffs on many of the semiconductor powerhouse’s exports, directs new investments towards the US technology industry and risks infuriating China.

Overnight, gains in technology and financial stocks sent Wall Street higher, with Nasdaq futures up 0.22 per cent in the Asian session. S&P 500 futures similarly tacked on 0.15 per cent.

“We know there’s lingering doubts about the spend around capex and AI more broadly, and I guess with the TSMC report yesterday being pretty solid and sounding optimistic, it certainly provided a much needed shot in the arm for those AI names which have been struggling on Wall Street in recent months,” said Tony Sycamore, a market analyst at IG.

“I wouldn’t say it galvanised or basically shot them higher, but it certainly provided some much needed reassurance there, that everything remains on track.”

Japan’s Nikkei fell 0.42 per cent, weighed down in part by a recovery in the yen which has retreated from an 18-month low.

Eurostoxx 50 futures fell 0.38 per cent while FTSE futures eased 0.18 per cent, after European shares scaled a record high on Thursday.

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In currencies, the dollar hovered near a six-week high, after a slew of upbeat US economic releases including data that showed the number of Americans filing new applications for unemployment benefits unexpectedly fell last week.

The euro languished near a 1-1/2-month low and bought US$1.1606, while sterling slipped 0.06 per cent to US$1.3376.

Against a basket of currencies, the dollar stood at 99.36, not far from Thursday’s top of 99.493, its highest since December 2.

“Mounting evidence of stable labour conditions is lowering the odds of an April cut, as fixed income watchers grow increasingly confident that the next benchmark drop will come from Chair Powell’s successor in June,” said Jose Torres, senior economist at Interactive Brokers.

Markets are now pricing in a 67 per cent chance that the Federal Reserve will stand pat on rates in April, up from 37 per cent a month ago, according to the CME FedWatch tool. Odds for a steady outcome in June have also risen to 37.5 per cent, compared to 17 per cent last month.

The yen was 0.1 per cent stronger at 158.48 per dollar, though it was not too far from an 18-month trough of 159.45 hit earlier in the week.

The currency has been sold off on the prospect of a snap election in Japan as early as next month, which investors bet could pave the way for expanded fiscal stimulus from Prime Minister Sanae Takaichi.

“For Takaichi, the snap poll offers the chance of a stronger mandate at home and abroad - but failure would likely spell a swift end to her premiership,” said Daniel Hurley, portfolio specialist at T. Rowe Price.

In the oil market, prices were recovering from their steep fall in the previous session after Trump’s watered-down comments on Iran allayed concerns over potential military action against Tehran and oil supply disruptions.

Brent futures were up 0.11 per cent at US$63.83 a barrel, having tumbled more than 4 per cent in the previous session. US crude was similarly up 0.2 per cent at US$59.31 per barrel, after a 4.6 per cent fall on Thursday.

Spot gold was down 0.16 per cent at US$4,607.50 an ounce. REUTERS