Asian stocks rose on Wednesday as better than expected earnings from CoreWeave helped sustain interest in the artificial intelligence trade, offsetting a Wall Street selloff fueled by hotter than expected United States inflation data. CoreWeave shares rose about 2 percent in late trading after it reported quarterly earnings that topped estimates and boosted its annual forecast, and the results eased worries about the artificial intelligence (AI) trade.
Why it matters
The rally was broad. The MSCI Asia Pacific index rallied more than 1 percent after capping its best two day performance in more than three months on Tuesday, tech was the top performing sector, and futures for the Nasdaq 100 jumped 1.3 percent, recouping the underlying index loss in regular trading. Japan Nikkei rose for a third straight session, up 0.80 percent to 60,942.48 at the midday break. SoftBank was the exception, falling 3 percent after a 7 billion dollar quarterly loss tied to its United States data centre projects.
The contrast with Tuesday could hardly be sharper. Wall Street ended lower overnight as stronger than expected inflation raised expectations of another Fed rate hike in December, with the Dow down 0.30 percent and the Nasdaq down 0.74 percent. Asia looked past the inflation print and focused on the earnings instead, and the earnings said the AI trade is still alive.
What happens next
SoftBank was the exception that proved the rule. Its shares fell 3 percent in Tokyo after a 7 billion dollar quarterly loss tied to its United States data centre projects, but the wider market rallied anyway. The message is that investors are now distinguishing between the companies building AI and the companies financing it.
What happens next will be decided by Nvidia earnings next week and by the Anthropic listing on November 19. If both confirm the demand story, the Asia rally will look like the start of a recovery. If either disappoints, Wednesday will look like a pause. For now, the region has voted for the earnings over the inflation print. The MSCI Asia Pacific index rallied more than 1 percent after capping its best two day performance in more than three months, and tech was the top performing sector.
