Asian equities posted solid gains on Friday, riding the wave of a record-breaking session on Wall Street that followed the Federal Reserve’s latest interest rate cut.
Markets across the region were on track to close out a mixed week on a positive note, even as fresh concerns about tech valuations emerged after disappointing earnings from industry heavyweights Oracle and Broadcom.
The rally came despite some jitters in the tech sector, with investors keeping a close eye on next week’s delayed US jobs data release—which could offer crucial clues about the central bank’s plans for 2026.
Mixed Signals From the Fed
Traders welcomed Fed chair Jerome Powell’s post-meeting comments on Wednesday—which came across as less aggressive than many had feared—though the policy board’s statement hinted that a fourth consecutive rate cut in January might not be on the cards.
Adding to the complexity, three decision-makers unusually voted against the move, muddying the waters on what to expect next.
Still, Wall Street investors chose to focus on the positives, betting on more cuts throughout next year and propelling both the S&P 500 and Dow to fresh all-time highs.
Asia Follows Suit
Asian markets broadly mirrored the upbeat sentiment, with Tokyo, Hong Kong, Sydney, Singapore, and Seoul all climbing around one percent. Wellington, Taipei, and Manila also posted gains, while Shanghai and Jakarta dipped slightly.
“So, (the Fed being) not as hawkish as it could have been and despite only one cut next year pencilled in, a new Fed chair and cooling jobs market means markets think there is more to come,” noted Neil Wilson at Saxo Markets.
Thursday’s data showed initial jobless claims jumped more than expected in the week ending December 6—marking their biggest spike in five and a half years and reinforcing signs of a cooling labour market.
Tech Sector Wobbles
The gains came against a backdrop of growing unease about the AI-fueled rally that’s seen tech stocks rack up eye-watering valuations, with chip giant Nvidia becoming the first company to crack a $5 trillion market cap back in October.
With warnings that the hundreds of billions poured into AI might have been excessive—and that investors could be waiting a while before seeing meaningful returns—analysts are flagging concerns that valuations might be overstretched and a bubble could be forming.
Those worries intensified on Thursday when chip titan Broadcom’s earnings fell short of sky-high investor expectations, and its AI sales outlook disappointed. The company’s shares tumbled more than four percent in after-hours trading.
This followed software giant Oracle’s quarterly revenue miss and revelation of surging spending on data centers to boost AI capacity. Oracle’s stock closed down 10.8 percent in New York.
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