Asian equities staggered into the weekend Friday following a mixed week that saw a Middle East ceasefire and huge new AI investments play off against the US shutdown concerning about a tech bubble. While some markets hit record highs along with gold, bitcoin, talk is growing that valuations among some companies may have run too high, sparking talk of a pullback.
Buying sentiment got another boost this week from news that ChatGPT-maker OpenAI had signed multi-billion-dollar chip deals with South Korean titans Samsung, SK hynix as well as US firm AMD. The spending added the hundreds of billions already pumped into the sector as firms look to get ahead on the sphere of artificial intelligence.
That turn has seen investors flood into the tech sector, sending stock prices rocketing -- with US chip leader Nvidia topping a $4 trillion market capitalization. However, there are rumblings that rally could run out of steam, causing jitters on trading floors. "Some areas of the market appear overheated," Keith Lerner Truist Advisory Services, said. "The extended stretch without meaningful pullback leaves the market more sensitive to negative surprises."
Such worries have been part of the reason behind the rally in gold to record above $4,000 on Wednesday. Alexandra Symeonidi, corporate credit analyst William Blair, wrote: "Given the strong rally in tech stocks some market participants started to question the sustainability of the price momentum and were driving parallels with recent bubbles.
"So, while the overall market has been healthy, investors adding hedges in what is broadly considered to be a safe haven asset." Gold has since pulled back, helped by breakthrough in Gaza peace talks and a strengthening dollar. All three main indexes of Wall Street ended in the red, and Asia largely followed suit.
Hong Kong and Tokyo were off around one percent, while Shanghai, Sydney, Singapore, Wellington, Manila were also down. Seoul, however, rallied more than one percent thanks to six percent surge in Samsung on optimism about its AI chips and memory business. Jakarta was also up. Adding to unease is the standoff in Washington that is expected to see a US government shutdown run into a third week, with both sides showing no sign of backing down.
Republican Senate Majority Leader John Thune indicated weekend session was unlikely, according to new website Semafor. The Senate was due to be in session on Friday, with eighth vote on the House-passed bill tipped to fail. Donald Trump repeated threats to slash government programme popular with Democrats as he berated the party over the shutdown at a cabinet meeting. "The Democrat shutdown is causing pain and suffering for hardworking Americans, including our military, our air traffic controllers and impoverished mothers, people with young children, people that have to live not the greatest of lives," he added.
Democrats are privately preparing a shutdown lasting several more weeks, CNN reported, if Republicans not agree to their demands to extend health care subsidies due to expire on December 31.
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