By Rae Wee
SINGAPORE, Feb 26 (Reuters) – Asian stocks made slight gains on Thursday thanks to upbeat earnings from Nvidia, though concerns over AI-driven disruption and rising costs remained, while the yen was on shaky ground as further rate hikes in Japan came under question.
Lingering worries about escalating geopolitical tensions between the U.S. and Iran, meanwhile, kept oil prices elevated, ahead of a third round of talks between the two countries later on Thursday. [O/R]
Nvidia on Wednesday forecast first-quarter revenue above market estimates, betting on Big Tech’s unabated spending on its AI processors.
But its stock traded flat after hours, as investors, accustomed to the company solidly exceeding revenue expectations for 14 straight quarters, were probably disappointed by the uneventful results this time around.
That contributed to a 0.3% dip in Nasdaq futures, while S&P 500 futures similarly fell 0.2%.
EUROSTOXX 50 futures and FTSE futures were down 0.2% and 0.08% respectively.
“The debate has been much less about stellar near-term results and more about the sustainability of AI capex spending given concerns around its quantum, monetisation and cashflow degradation,” said Richard Clode, portfolio manager at Janus Henderson Investors.
Japan’s Nikkei was up 0.15%, while South Korea’s KOSPI jumped 3%.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.65%. Hong Kong’s Hang Seng Index was down 0.76% while China’s CSI300 blue-chip index eased 0.2%.
“The immediate market reaction is relief, translating into a modest risk-on tone after the AI-driven volatility of recent weeks,” said Saxo’s chief investment strategist Charu Chanana of the reaction in Asian share markets to Nvidia’s results.
“That said, this doesn’t end the debate. Valuations remain stretched in parts of the ecosystem, and disruption risks are becoming more visible as competition intensifies.”
Traders have blown hot and cold on the AI trade in recent weeks, worried about returns on investment and the technology’s potential to upend entire industries, yet hesitant to sit on the sidelines.
WILL THEY, WON’T THEY?
In currencies, the yen was the main focus for investors, as it remained pinned near the two-week low it hit after Japan’s government nominated two academics seen by markets as strong advocates of economic stimulus to join the central bank’s board.
The surprise move was viewed in markets as a reflection of Prime Minister Sanae Takaichi’s easy monetary policy preferences, throwing into question the outlook for further Bank of Japan (BOJ) rate hikes.
The yen clawed back some of its losses on Thursday, rising 0.3% to 155.88 per dollar, helped in part by comments from hawkish BOJ board member Hajime Takata, who called for gradual interest rate hikes.
The Yomiuri newspaper also reported that BOJ Governor Kazuo Ueda, in an interview, left the door open to a near-term rate hike.
“Dovish-leaning BOJ nominees have reignited concerns the central bank may lag policy normalisation, weakening the JPY and steepening the JGB curve,” strategists at OCBC said in a note.
“Our end-2026 USD/JPY forecast stays at 149, as the currency is unlikely to transition from a funding currency to an investment currency unless the BOJ turns more hawkish than our baseline outlook of two rate hikes this year.”
The dollar was on the back foot, with the euro up 0.1% at $1.1821, while sterling was steady at $1.3561.
In oil markets, prices rose as jitters about the threat to supply from a potential military conflict between the U.S. and Iran remained.
Both sides will hold the latest round of talks in Geneva on Thursday aimed at resolving their longstanding nuclear dispute and averting new U.S. strikes on Iran following a large-scale military buildup.
Brent crude futures were up 0.28% at $71.05 a barrel, while U.S. crude rose 0.24% to $65.58 per barrel.
Spot gold was up 0.5% at $5,197.08 an ounce, buoyed by some safe-haven demand. [GOL/]
(Reporting by Rae Wee; Editing by Shri Navaratnam and Kate Mayberry)
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