Return of Confidence in the AI Deal Revives Asian Stocks

SadaNews - Asian stocks rose alongside U.S. stock futures after extremely strong sales forecasts from Micron Technology Inc revived confidence in the artificial intelligence deal, further boosted by falling oil prices.

Nasdaq 100 futures jumped by 1.8%, while S&P 500 futures rose by 0.6%. The Kospi index in South Korea surged by up to 6%, and the broader MSCI Asia-Pacific index gained 1.5%.

Shares of Micron, the largest U.S. manufacturer of computer memory chips, rose by about 15% after the market closed, as its quarterly sales forecast significantly exceeded Wall Street estimates, indicating that the AI-driven growth wave remains strong.

Brent crude erased all its gains made during the war, retreating to below $73 a barrel, with increased flows through the Strait of Hormuz following progress in a peace agreement between the U.S. and Iran. This movement, along with Micron's strong results, provided relief to stock traders after a tech-led sell-off pushed a global index to a two-week low.

Attention now turns to the release of the Federal Reserve's preferred inflation index. The Bloomberg dollar index showed little change after a hawkish policy outlook helped push it to a seven-month high on Wednesday. Treasury bonds stabilized following their rise in the previous session.

Hugh Lam, an investment strategist at Betashares, said: "Micron's earnings overnight reminded investors that the resiliency of the memory chip cycle and broader AI deal remains intact." He added: "While sentiment can fluctuate violently in response to clear stock price movements, structural supply constraints across both DRAM and NAND memory ensure a floor for any further weakness in these stocks until at least 2027."

Micron's Results Support AI Stocks

Adding to the optimism in the sector, South Korea's SK Hynix Inc said it seeks to raise about $29 billion from a stock listing in the U.S. Kioxia Holdings Corp, a supplier of NAND memory chips, which has become the most valuable company in Japan this year, plans to issue American depositary shares. Both stocks rose more than 10%.

Micron, along with Samsung Electronics Co and SK Hynix, has been one of the biggest beneficiaries of the surge in data center spending. Demand for conventional memory chips and high-bandwidth memory, a key component in AI systems, continues to exceed supply.

Masahiro Wakasugi and Jake Silverman from Bloomberg Intelligence noted that "Micron's revenue growth of 74% sequentially in the third fiscal quarter ending in May indicates that SK Hynix and Samsung Electronics could achieve similar revenue jumps in their quarters from April to June due to increases in DRAM and NAND chip prices."

Micron's revenues are expected to be around $50 billion in the fourth fiscal quarter, which runs through August, according to its statement. Analysts had estimated $43.2 billion on average. Excluding certain items, earnings are expected to be around $31 per share, compared to estimates of $25.31.

Gold Continues to Fall Amid Anticipation of U.S. Inflation Data

Elsewhere in the markets, gold stabilized near $4,000 per ounce after dropping below that mark for the first time since November, affected by a recovery in the U.S. dollar and the possibility of rising interest rates. Bitcoin showed little change, trading above $60,000 after briefly falling below the closely watched support level on Wednesday.

Ting Ling Tan, a strategist at UBS Global Wealth Management, stated in an interview with Bloomberg Television: "In the near term, we do not rule out the fact that the dollar could remain stronger for longer," as it is supported by strong momentum and a hawkish Federal Reserve.

He added that for the Federal Reserve, there is "certainly a justification" to maintain a hawkish tilt to keep inflation expectations in check, but with falling oil prices, the need to raise interest rates will effectively dissipate.

The rise in Treasury bonds on Wednesday indicated another re-evaluation of the likely path of interest rates for the Federal Reserve, following a week in which traders flocked to bets that it might raise rates as early as next month after Kevin Warsh's first meeting leading the bank.

Two-year Treasury yields, which are most closely tied to Federal Reserve policy, fell for the second day to about 4.14%, retreating from a 16-month high of 4.23% reached on Monday.

Analysts expect the Personal Consumption Expenditures Price Index to show a monthly and annual acceleration in May.

Nick Twidale, senior market analyst at AT Global Markets, stated that Personal Consumption Expenditures data "will have a significant impact on the markets." He added: "If it comes in close to or above expectations, we see the dollar trending higher. We may also see a decrease in positive risk sentiment."

Meanwhile, China has begun marketing up to 5 billion euros, or $5.7 billion, of sovereign bonds in what could be its largest-ever deal in euros. Separately, the country's central bank is adding an overnight tenor to its open market operations, a key step towards reshaping how it directs short-term borrowing costs.