Asian equities showed resilience on Friday, with semiconductor companies spearheading a rally that offset earlier concerns about Nvidia Corp.’s revenue forecast. Meanwhile, the dollar surged toward its eighth consecutive weekly gain, continuing its dominant streak in global markets.
Markets in Australia, Japan, and South Korea ended the week on a positive note, with the MSCI Asia Pacific Index climbing as much as 0.7%. The technology sector led the charge, rebounding from Thursday’s selloff after Nvidia’s strong performance in the U.S. sparked renewed investor confidence.
Semiconductor stocks across the region benefited from Nvidia’s gains, as optimism around artificial intelligence (AI) and pro-growth policies under the incoming U.S. administration of President-elect Donald Trump provided a supportive backdrop.
However, not all Asian markets joined the rally. Shares in Hong Kong and China continued to struggle, extending losses into midday trading as doubts over China’s economic recovery weighed heavily on sentiment.
The prospect of stricter U.S. tariffs under the Trump administration added further pressure. An index tracking U.S.-listed Chinese companies fell 1% on Thursday, reflecting ongoing concerns about trade tensions and weak domestic economic data.
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“U.S. exceptionalism remains a fairly strong backdrop in these market conditions,” said Taosha Wang, portfolio manager at Fidelity International, in an interview with Bloomberg Television. Wang added that while artificial intelligence and potential U.S. policy shifts are boosting U.S. equities, Fidelity is waiting to see tangible results from China’s government stimulus in corporate earnings.
Despite Friday’s gains, Asian equities are on track for back-to-back monthly losses for the first time this year. Strength in the U.S. dollar and lingering worries over China’s economic trajectory have weighed on the region.
Still, some analysts point to Asia’s more favorable valuations compared to U.S. markets as a key driver for recovery in select assets. As U.S. bond yields rise, Asian equities are finding pockets of support from bargain hunters.
Bitcoin surged to a fresh high, breaking past $99,000, fueled by optimism over President-elect Trump’s perceived support for cryptocurrencies and expectations of a lighter regulatory environment.
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Adding to the excitement, Fox Business reported that Chris Giancarlo, the former chairman of the Commodity Futures Trading Commission and a proponent of digital assets, is being considered for a newly created role as a “crypto czar” under the incoming administration. Giancarlo’s appointment would likely be seen as a significant step toward legitimizing and expanding the cryptocurrency industry.
The U.S. dollar continued its march upward, extending gains for the third consecutive day. The dollar index rose more than 2% this month, adding to the nearly 3% increase in October, as geopolitical concerns in Europe drove demand for the greenback. This week’s gains put the dollar on track for its longest winning streak in 14 months.
Most Asian currencies struggled under the dollar’s strength, with the Japanese yen erasing earlier gains despite inflation data that held above the Bank of Japan’s target. “Safe-haven flows, likely influenced by geopolitical developments between Ukraine and Russia, bolstered the dollar further,” noted Jun Rong Yeap, market strategist at IG Asia.
Treasury yields slipped by 2 basis points on Friday after rising earlier in the week. Federal Reserve Bank of Chicago President Austan Goolsbee hinted at a potential rate cut, expressing confidence that inflation is steadily moving toward the central bank’s target.
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Elsewhere, some companies within India’s Adani Group showed signs of recovery after Thursday’s dramatic $27 billion selloff. The rout followed U.S. allegations of bribery against group chairman Gautam Adani, which the company has vehemently denied.
The combination of strong performance from semiconductor stocks, optimism in the crypto market, and sustained dollar strength has set a dynamic tone for global markets. However, lingering concerns over China’s economic outlook, geopolitical risks, and ongoing trade tensions will continue to influence market sentiment.
Investors will be watching closely as the incoming Trump administration begins to shape its economic policies, with potential implications for global trade, technology, and cryptocurrency regulation. For now, Asian markets seem poised to navigate these challenges with a cautious yet optimistic approach.