Asian Stocks Rise Amid Lunar New Year Trading Ahead of Fed Decision

HONG KONG (AP) — Asian stocks saw a rise on Wednesday during slow trading influenced by the Lunar New Year, buoyed by a recovery in Wall Street, especially in the technology sector. This positive shift comes as concerns over the Chinese AI company DeepSeek have diminished.

Despite many markets in Asia being closed for the holidays, investors remained focused on the upcoming Federal Reserve rate decision expected later in the day. On the other hand, U.S. futures remained stable while oil prices experienced a decline.

In Tokyo, the Nikkei 225 index managed to rebound from previous losses, increasing by 0.7% to reach 39,273.49. Meanwhile, Australia's S&P/ASX 200 also rose by 0.7% to 8,455.70, driven by data from the Australian Bureau of Statistics revealing a 0.2% increase in the Consumer Price Index for the December 2024 quarter. This figure represents the smallest increase since mid-2020 when inflation had dropped during the COVID-19 pandemic.

India's Sensex saw a gain of 0.5%, contrasting with Thailand's SET index, which decreased by 0.2%.

On Tuesday, Wall Street's tech stocks made a notable recovery after facing doubts the previous day regarding the necessity of heavy investments in artificial intelligence.

The S&P 500 registered a 0.9% increase, recovering more than half of the losses from Monday. The Dow Jones Industrial Average rose by 0.3% to 44,850.35, while the Nasdaq composite surged 2% to 19,733.59 after a significant drop of 3.1% the day before.

Highlighting the AI sector, shares of Nvidia, whose chips are fundamental to the AI boom, saw an increase of 8.8% following a previous decline of nearly 17% on Monday, marking its worst drop since the onset of the COVID-19 pandemic.

Other companies involved in the AI sector, like chip manufacturer Broadcom, gained 2.6%, and Constellation Energy rose by 1.4% after suffering a near 21% drop on Monday. This volatility arose from expectations around providing electricity to support massive AI data centers.

Concerns were sparked when DeepSeek announced it had developed a large language model comparable to those from major U.S. competitors but at a much lower cost, leading to speculations about the necessity of extensive AI spending on chips and electricity.

Despite these uncertainties, AI stocks have risen significantly on Wall Street in recent years, driven by optimism regarding sustained investments. However, this rapid growth has drawn criticism, suggesting that stock prices could be inflated.

The full impact of DeepSeek's advancements on the AI industry remains unclear. It could potentially slow growth in spending on data centers and hardware, but could also accelerate demand in other sectors.

According to James Egelhof, chief U.S. economist at BNP Paribas, "If AI becomes less expensive to use, we think businesses will adopt it more quickly, leading to greater investments in AI software. This shift could lead to a rise in software investment that might compensate for any slowdown in data center-related spending."

Later this week, major companies such as Apple, Meta Platforms, Microsoft, and Tesla are scheduled to report their profits.

Additionally, a report showing U.S. consumer confidence fell short of economists' expectations had a limited impact on the bond market. However, the focus now shifts to Wednesday's anticipated interest rate decision by the Federal Reserve.

The consensus is leaning towards the Fed maintaining the current federal funds rate, which would mark the first meeting since September without a rate cut aimed at stimulating the economy.

In today’s trading, benchmark U.S. crude oil lost 14 cents, bringing the price down to $73.63 a barrel, while Brent crude, the international benchmark, dipped by 18 cents to 76.31 a barrel.

In currency markets, the U.S. dollar decreased to 155.09 Japanese yen from 155.53 yen, while the euro traded at $1.0438, slightly down from $1.0432.

stocks, Asian, technology