Asian stocks are set for a sluggish open after Wall Street shares took a breather from notching a series of all-time highs.
Futures for Tokyo’s equity benchmark signaled a slight gain, as Sydney looks flat and Hong Kong reopens after a holiday. The S&P 500 slipped 0.4% on Tuesday as concerns grew that a $16 trillion surge from its April lows was excessive. Oil rose in early Asia trading after an industry report indicated a drop in stockpiles at a US delivery hub.
The Japanese yen slid to its lowest against the dollar since February as Sanae Takaichi’s surprise win as the new leader of the ruling Liberal Democratic Party continued to weigh on the currency. It also moved to a fresh record against the euro since the common currency’s inception in 1999.
Bonds rose as a $58 billion Treasury sale drew solid demand. Gold got to within $10 of reaching $4,000 an ounce for the first time.
An index of US-listed Chinese shares fell the most since end-August, before the second-biggest economy returns from a week-long holiday on Thursday. Elsewhere in Asia, New Zealand and Thailand’s central banks are both expected to cut rates by a quarter point later on Wednesday.
In the US, investor optimism has grown heated in recent months, with many seeming too busy chasing the upside to worry about risks like a US government shutdown and stretched valuations.
Traders also parsed remarks from Federal Reserve officials, with Governor Stephen Miran saying his expectations for a limited tariff impact on inflation mean the Fed can keep easing policy. Fed Bank of Minneapolis President Neel Kashkari warned that any drastic rate cuts would risk stoking prices.
“Profit-taking risks have rapidly risen across markets, and are particularly elevated for Nasdaq, potentially hampering further upside,” said Citigroup’s Chris Montagu.
Some Wall Street pros note that having multiple large technology stocks surge by double-digits in quick succession could be a sign that valuations have become disconnected from underlying fundamentals.
The moves come amid growing chatter about a bubble forming around AI as key players pledge billions of dollars in deals with a cohort of companies making infrastructure for the technology. As more money is spent, there’s mounting fear the trend will end in a crash the way it did 25 years ago following the dot-com euphoria.
Meanwhile, Jamie Dimon said JPMorgan Chase & Co. spends $2 billion a year on developing AI technology, and saves about the same amount annually from the investment.
“We know that it’s got to billions of cost savings and I think it’s the tip of the iceberg,” the bank’s chief executive officer, who has consistently touted the opportunities offered by AI, told Bloomberg TV.
Source: theedgemalaysia