Asia stocks in AI euphoria, oil slips on Gaza deal

Asian stock markets continued their rally on Thursday as investors turned to all things AI, while gold remained above US$4,000 ($A6,073) and the dollar maintained its recent big gains.

Oil prices fell as geopolitical tensions eased slightly following news that Israel and Hamas had agreed to the first phase of a ceasefire plan to end the two-year conflict.

US President Donald Trump said he could go to Egypt this weekend to discuss further steps in the agreement.

In equity markets, the S&P 500 and Nasdaq hit record highs as the bull run in AI-related technology resumed, and funds were again rewarded for buying the dips.

“The AI ​​Theme remains intact as we see another influx of billion-dollar investment coming into the space,” analysts at JPMorgan wrote in a note.

“Investors can talk all they want about the ‘cyclicality’ of this AI investment cycle, but until proven otherwise, these daily headlines are strongly rewarded.”

They noted that forecasts for earnings growth in the tech sector have increased to 20.9 percent for the upcoming reporting season, from 15.9 percent in June. It was seen that estimates increased in approximately 81 percent of the stocks in the technology sector, led by Nvidia and Apple.

Overall, earnings are expected to increase by 8.0 percent and revenues by 6.3 percent in the third quarter.

The leap in technology pushed Japan’s Nikkei index to all-time highs, up 1.4 percent. Offshore funds bought a net 2.5 trillion yen ($24.90 billion) worth of Japanese shares in the week to Oct. 4, data showed.

Taiwan shares rose 1.2 percent to a new record, while MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.3 percent.

Chinese blue chips rose 0.4 percent as they reopened after a week-long holiday.

Beijing has announced new restrictions on exports of rare earth minerals and equipment, a sticking point in trade talks with the United States.

S&P 500 futures and Nasdaq futures calmed after Wednesday’s gains. EUROSTOXX 50 futures fell 0.2 per cent, along with FTSE futures and DAX futures.

Bond markets remained largely calm, with minutes from the Fed’s last meeting showing a majority of members endorsing policy easing even as they warned of upside risks to inflation.

Futures contracts continue to imply a 94 percent chance of another quarter-point rate cut in November, pricing in a 44 basis-point easing by the end of the year.

“While most Fed officials want to cut more, some participants want to approach further cuts with caution,” economists at Citi said in a note.

“We expect further weakening in the labor market to push most Fed officials to support lowering the policy rate at each of the next four meetings.”

The yield on the 10-year Treasury fell to 4.115 percent on Wednesday, shrugging off a middling auction of new bonds.

Among currencies, the dollar remains near an eight-month high of 152.54 against the yen, gaining 3.5 percent so far this week amid concerns that the Japanese government will borrow more.

The euro was steady at $1.1641 ($A1.7675) after touching a six-week low of $1.1598 ($A1.7610) as data showed German industrial production suffered its biggest monthly decline in three years in August.

Gold fell 0.2 per cent to US$4,031 ($6,120) an ounce but remains up 3.9 per cent in the week so far. Gold was supported by expectations of a series of interest rate cuts in the US, as well as investors’ demand for assets that cannot be devalued by governments and central banks’ purchases for reserves.

There is a desire to partially hedge against the risk of a continuous decline in the US dollar and a sell-off in bond markets as governments need to borrow more.

Oil prices fell as news of an Israel-Hamas ceasefire reduced a potential threat to supply.

Brent fell 0.6 per cent to US$65.89 ($A100.04) per barrel, while US crude fell 0.7 per cent to US$62.12 ($A94.32) per barrel.

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