Asian Stock Market Sees Rise, Led by Tech Sector Boosted by Nvidia and AI Optimism
On Thursday, the majority of Asian stocks witnessed an increase, driven by gains in the technology sector, especially after prominent chipmaker Nvidia Corp (NASDAQ:NVDA) reported stronger-than-expected quarterly earnings. However, concerns surrounding China’s economic situation and high interest rates curtailed broader gains.
Particularly, chipmaking stocks within the region, especially those with connections to Nvidia and artificial intelligence, experienced significant growth. The technology sector as a whole also recorded advancements.
A slight reduction in U.S. Treasury yields contributed to the sector’s growth, even though the yields remained close to multi-decade highs. While the Asian stock market had faced substantial losses over the past week due to ongoing concerns about China and rising U.S. interest rates, the current upswing offered some relief.
Notably, Nvidia suppliers and tech giants gained ground following Nvidia’s impressive Q2 performance. Advantest Corp (TYO:6857), a Japanese chip testing equipment manufacturer, soared over 2%, topping the Nikkei 225 chart. Additionally, TSMC (TW:2330) (NYSE:TSM), a major chipmaking company, witnessed a rise of over 2%.
SK Hynix Inc (KS:000660) from South Korea, which supplies Nvidia with memory chips, surged by more than 5%, while Samsung Electronics Co Ltd (KS:005930) increased by 2.1%.
Nvidia’s announcement of better-than-expected Q2 earnings and optimistic guidance for the third quarter sparked a surge in its shares by more than 6% in after-hours trading. The company, recognized as the world’s most valuable chipmaker, benefited from the ongoing boom in artificial intelligence development. This positive news not only elevated U.S. tech stocks but also had a ripple effect on Asian markets.
The tech stock gains led to a 0.3% increase in the Nikkei 225 and a 0.7% rise in South Korea’s KOSPI. The latter also benefited from the Bank of Korea’s decision to maintain steady interest rates for a fourth consecutive month.
Prominent tech companies Baidu Inc (HK:9888) (NASDAQ:BIDU), Alibaba Group (HK:9988) (NYSE:BABA), and Tencent Holdings (HK:0700) experienced gains of 0.9% to 3%. All three of these companies have connections to artificial intelligence. This uptrend propelled Hong Kong’s Hang Seng index to rise by 1%.
The outlook for India’s Nifty 50 index also looked positive, likely due to the strength in heavyweight technology stocks.
While gains in the technology sector were evident, persistent worries about a potential Chinese economic slowdown and the uncertainty surrounding rising U.S. interest rates constrained broader growth in Asia. China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes exhibited sluggish performance, trading within a flat-to-low range on Thursday.
Investor hopes for additional stimulus measures from China have largely gone unmet, and the economic conditions in the country deteriorated throughout July.
Subdued business activity indicators from both the U.S. and the euro zone contributed to a decline in appetite for risk-driven assets. Traders remained cautious, awaiting more insights into U.S. monetary policy from the Jackson Hole Symposium.