Asian stocks hit record highs as AI rally returns, dollar stays firm

Asian stocks advanced on Friday as the artificial intelligence boom regained momentum, while the dollar held near a six-week high after upbeat US economic data left traders trimming bets on Federal Reserve rate cuts.

Oil prices fell alongside safe-havens gold and silver after US President Donald ‍Trump adopted a wait-and-see posture towards the unrest in Iran, having ​earlier threatened intervention.

MSCI's broadest index of Asia-Pacific shares outside Japan scaled a record high of 761.53 points, as stellar results from Taiwanese chipmaker TSMC breathed new life into the AI trade.

Technology-heavy indexes in Taiwan and South Korea also notched all-time peaks.

 

The US and Taiwan clinched a trade deal on Thursday that cuts tariffs on many of the semiconductor powerhouse's exports, directs new investments towards the US technology industry and risks infuriating China.

Overnight, gains in technology and financial stocks sent Wall Street higher, with Nasdaq futures up 0.4 per cent in the Asian session. S&P 500 futures similarly tacked on 0.3 per cent.

"We know there's lingering doubts about the spend around capex and AI more broadly, and I guess with ​the TSMC report yesterday being pretty solid and sounding optimistic, it certainly provided a much needed shot in the arm for those AI names which have been struggling on Wall Street in recent months," said Tony Sycamore, a market analyst at IG.

"I wouldn't say it galvanised or basically shot them higher, but it certainly provided some much needed reassurance there, that everything remains on track."

Japan's Nikkei fell 0.14 per cent, weighed down in part by a recovery in the yen, which has retreated from an 18-month low.

EUROSTOXX 50 futures fell 0.3 per cent while FTSE futures eased 0.06 per cent, after European shares scaled a record high on Thursday.

In China, stocks edged lower and were set to snap a four-week winning streak, as regulators tightened margin financing rules. The CSI300 blue-chip index fell 0.34 per cent.

Traders on Yen intervention watch

The yen stole the spotlight in the currency market after Japanese Finance Minister Satsuki Katayama said on Friday Tokyo would not rule out any options to counter excessive foreign exchange volatility, including coordinated intervention with the US

Her comments lifted the yen slightly, with the currency extending gains after a Reuters report that some Bank of Japan policymakers see scope to raise interest rates sooner than markets expect, with April a distinct possibility.

It was last 0.2 per cent stronger at 158.36 per dollar.

The yen has been sold off on the prospect of a snap election in Japan as early as next month, which investors bet could pave the way for expanded fiscal stimulus from Prime Minister Sanae Takaichi.

"For Takaichi, the snap poll offers the chance of a stronger mandate at home and abroad - but failure would likely ‌spell a swift end to her premiership," said Daniel Hurley, portfolio specialist ​at T. Rowe Price.

Elsewhere, the dollar hovered near a six-week high after a slew of upbeat US economic releases including data that showed the number of Americans filing new applications for unemployment benefits unexpectedly fell last week.

The euro languished near a 1-1/2-month low and bought $1.1606, while sterling was little changed at $1.3385.

Against a basket of currencies, the dollar stood at 99.34, not far from Thursday's top of 99.493, its highest since December 2. [FRX/]

"Mounting evidence of stable labour conditions is lowering the odds of an April cut, as fixed income ‍watchers grow increasingly confident that the next benchmark drop will come from Chair Powell's successor in June," said Jose Torres, senior economist at Interactive Brokers.

Markets are now pricing in a 67 per cent chance that the Federal Reserve will stand pat on rates in April, up from 37 per cent a month ago, according to the ‍CME FedWatch tool. ‌Odds for a ​steady outcome in June have also risen to 37.5 per cent, compared to 17 per cent last month.

In the oil market, prices extended their ‍steep fall in the previous session after Trump's watered-down comments on Iran allayed concerns over potential military action against Tehran and oil supply disruptions.

Brent futures were down 0.19 per cent ‍at $63.64 ‍a barrel, having tumbled more than ‌4 per cent in the previous session. US crude similarly slipped 0.15 per cent to $59.10 per barrel after a 4.6 per cent fall on Thursday.

Spot gold was down 0.06 per cent at $4,611.49 an ounce. [GOL/]