IEA plans oil release beyond 400M barrel pact
Asian stocks rebounded Friday, following gains on Wall Street, as investors bought shares after a technology selloff fueled by concerns about the sustainability of the artificial-intelligence trade.
South Korea’s Kospi rose 3.6% after falling 7.6% and triggering a temporary trading halt in the previous session. Memory-chip makers and index heavyweights Samsung Electronics and SK Hynix gained 4.3% and 3.5%, respectively.
South Korea’s Finance Ministry said Friday that the economy and stock market remain fundamentally sound. It attributed heightened volatility to external factors, including elevated U.S. Treasury yields, developments in the AI industry and geopolitical tensions.
Japan’s Nikkei Stock Average gained 1.8%, while Taiwan’s Taiex added 0.55%.
“U.S. stocks bounced after a drop fueled by concerns about the sustainability of the AI trade, with attractive valuations and solid corporate earnings luring bargain hunters,” said Commonwealth Bank of Australia’s Ryan Felsman.
Comments from Nvidia Chief Executive Jensen Huang also helped restore some confidence in the AI trade. Huang pushed back on financial concerns around U.S. cloud provider CoreWeave, causing its stock to rebound. The Nvidia-backed company, which provides computing power, has become a bellwether for one of the riskiest corners of the AI trade. Its shares and bonds had fallen sharply amid concerns about AI financing and strong inflation data.
Despite the rebound, Tiger Brokers’ James Ooi said investors are likely to keep a close eye on CoreWeave’s financing costs. Some of its debt is linked to U.S. floating interest rates and could be affected by the Federal Reserve’s recent rate hike.
Heavy equity outflows from South Korea and Taiwan have also weighed on their currencies. Taiwan’s foreign equity outflows reached a record US$9.9 billion on Thursday, according to MUFG. The U.S. dollar was last 0.2% higher at 32.400 New Taiwan dollars and 0.1% higher at 1,342.10 won.
Investors also weighed comments from Federal Reserve Chairman Kevin Warsh, who declined to endorse or push back on colleagues’ recent signals that officials are in no rush to raise interest rates this month. He said the central bank was no longer in the business of previewing its decisions.
Oil futures declined after the International Energy Agency outlined plans for further releases of crude oil and diesel fuel. The IEA said Thursday that the volume of emergency oil stocks being released by member countries would exceed the 400 million barrels agreed upon in March. Members have pledged to expedite the remaining releases of around 100 million barrels, including around 20 million barrels of diesel, the IEA said.
ING strategists said the U.S. “probably won’t be happy with the scale of the release, particularly regarding diesel,” as initial projections had suggested that around 50 million barrels of diesel could be released. “The risk is that if the U.S. believes these volumes are not enough, the administration may mull restrictions on U.S. diesel exports once again,” the strategists said.
Front-month West Texas Intermediate crude oil futures declined 0.8% to $97.19 a barrel, while front-month Brent fell 0.65% to $105.23 a barrel.
Precious metals rose slightly as U.S. Treasury yields and the dollar index edged lower. Spot gold was 0.1% higher at $4,176.08 per ounce and spot silver rose 0.6% to $57.78 per ounce.