Asian stocks buoyed by tech; Japan coasts past Q4 recession

Investing.com-- Most Asian stocks rose on Thursday as major technology shares tracked a rebound in their U.S. peers, while Japan’s Nikkei 225 neared record highs even as the economy unexpectedly entered a recession. 

But while Japanese markets shone, gains across broader Asia were a lot more subdued, as risk aversion still remained in play amid waning bets on early interest rate cuts by the Federal Reserve.

Regional markets took a positive lead-in from Wall Street, with U.S. stock benchmarks closing higher overnight as persistent hype over artificial intelligence and some strong earnings drove gains in heavyweight tech shares.

S&P 500, Nasdaq 100 and Dow Jones futures edged lower in Asian trade. Analysts said that U.S. stocks were likely due for more losses after Tuesday’s hotter-than-expected inflation data.

Nikkei 225 near record highs as Q4 recession muddles BOJ rate hike bets 

The Nikkei 225 rose 0.7% to 37,982.50 points- a 34-year high. The index was also within spitting distance of a record-high 38,915 points last seen in 1989. 

Gains in the Nikkei were fueled largely by heavyweight tech stocks, with chipmakers and chip-adjacent stocks logging strong gains on AI hype. Tech investor SoftBank Group Corp. (TYO:9984) rose 2.4% to a near three-year high, while chip testing equipment maker Advantest Corp. (TYO:6857) rose 1.6% and Tokyo Electron Ltd. (TYO:8035)- Japan’s most valuable chipmaker- added nearly 4%.

 The broader TOPIX fell 0.1%.

Data released earlier in the day showed Japan’s gross domestic product unexpectedly shrank in the December quarter, as private consumption was battered by high inflation and a weak yen. The reading showed Japan entering a technical recession, after logging two straight quarters of GDP declines.

But the recession fueled bets that the Bank of Japan will further delay raising interest rates from ultra-low levels- a trend that heralds an extended period of easy monetary conditions for Japanese markets. This trend was a key driver of Japan’s stock rally over the past two years. 

Other Asian markets also rose on strength in the tech sector. Hong Kong’s Hang Seng index added 0.5% as a Bloomberg report showed that Michael Burry- who had famously called the 2008 subprime mortgage crisis- increased his holdings of tech heavyweights JD.com (NASDAQ:JD) (HK:9618) and Alibaba Group (NYSE:BABA) (HK:9988).

South Korea’s KOSPI edged up 0.1%. Indonesian stocks were the best performers for the day, with the Jakarta Stock Exchange Composite Index surging 1.3% after Defence Minister Prabowo Subianto appeared poised to win the country’s presidency.

Australia’s ASX 200 added 0.7% as data showed that the labor market cooled further in January, which gives the Reserve Bank less impetus to hike interest rates further. But gains on the ASX were held back by a 2.3% drop in heavyweight miner BHP Group Ltd (ASX:BHP), after it flagged a staggering $5.7 billion impairment charge on its Brazil operations and Australian nickel business. 

Futures for India’s Nifty 50 index pointed to a muted open, although local tech heavyweights appeared likely to track gains in their U.S. peers.