Asian Markets Show Mixed Results as Oracle’s Earnings Weigh on Tech

Asian markets displayed mixed performances on Thursday as investor sentiment shifted following Oracle’s disappointing earnings report, which raised concerns regarding artificial intelligence investments. The U.S. stock market had been approaching record highs after the Federal Reserve’s recent interest rate cut, but Oracle’s results had a ripple effect on technology shares across the region.

The Federal Reserve’s decision to lower its main interest rate was widely anticipated. However, comments from Fed Chair Jerome Powell suggested the possibility of further cuts by 2026, fueling optimism among investors. In contrast, Oracle’s shares plummeted by 11.5% in aftermarket trading, leading to a decline in several Asian technology companies. According to Ipek Ozkardeskaya from Swissquote, while the report was not drastically negative, it confirmed existing concerns regarding heavy AI spending funded by debt, with uncertain revenue timelines.

Market Reactions Across Asia

In Japan, the Nikkei 225 index fell by 0.9% to 50,148.82, primarily driven down by a 7.7% decline in shares of SoftBank Group Corp., a significant player in the AI sector. Local market pressures intensified as expectations grew that the Bank of Japan might raise interest rates at its upcoming meeting next week.

Hong Kong’s Hang Seng index lost earlier gains, closing down 0.1% at 25,513.38. The Hong Kong Monetary Authority followed the Fed’s lead by reducing borrowing costs to 4.00%, marking the lowest rate since October 2022. Meanwhile, the Shanghai Composite index declined by 0.7% to 3,873.32, as investor sentiment remained cautious ahead of China’s credit data for November.

In Australia, the S&P/ASX 200 showed modest gains, increasing nearly 0.2% to 8,592.00. This rise came after three consecutive days of decline, supported by robust performances in gold and mining stocks. Australia’s seasonally adjusted unemployment rate remained steady at 4.3%, slightly below expectations of 4.4%.

South Korea’s Kospi index experienced a slight drop, decreasing 0.6% to 4,110.62. The main chipmaker, SK Hynix, saw a 3.8% decrease after warnings were issued concerning its rapid stock price increase this year. Taiwan’s Taiex index closed down 1.3%, while India’s BSE Sensex managed to rise by 0.4%.

Wall Street’s Response and Broader Implications

On Wednesday, U.S. markets showed positive momentum, with the S&P 500 climbing 0.7% to 6,886.68, nearing its all-time high set in October. The Dow Jones Industrial Average surged by 1% to 48,057.75, and the Nasdaq Composite increased by 0.3% to 23,654.16. Lower interest rates generally encourage economic activity and can elevate investment prices, albeit with potential inflationary risks.

The recent interest rate cut by the Fed did not significantly impact markets, but Powell’s remarks suggested a more flexible approach to future rate adjustments. He indicated that the central bank faces challenges as the job market slows while inflation pressures rise. By balancing these factors, the Fed has positioned itself to reassess future interest rate strategies based on incoming data.

In corporate news, GE Vernova saw a remarkable increase of 15.6% after the energy company raised its revenue forecast for 2028, doubled its dividend, and expanded its stock buyback program. Other notable stocks included Palantir Technologies, which rose by 3.3%, and Cracker Barrel Old Country Store, increasing by 3.5%.

As of early Thursday trading, U.S. benchmark crude oil prices fell by 31 cents to $58.15 per barrel, while Brent crude dropped 34 cents to $61.87 per barrel. The U.S. dollar strengthened slightly against the Japanese yen, rising to 156.04 from 156.02, while the euro dipped to $1.1687 from $1.1696.

The mixed performance across Asian markets reflects the complex interplay of global economic factors, investor sentiment, and corporate earnings, underscoring the challenges and opportunities facing the region’s economies.