Asian Investors in Search of Market Recovery

Signs of Recovery in Asian Stock Markets

Investors in Asia struggled to recover stocks on Wednesday despite challenges caused by global market concerns. The worries about a bubble fueled by artificial intelligence and uncertainties over U.S. interest rates are among the main reasons for this struggle.

The rise of technology this year, coupled with speculation, suggests that a sharp correction for stocks may be inevitable. Companies such as Amazan, Meta, Alphabet, and Apple, which played a significant role in pushing Wall Street's three major indices to historical highs, raise concerns that any issues with these firms could have a major impact on the markets.

In this context, the focus on Wednesday was on the earnings report of chip giant Nvidia. Nvidia became the first company to reach a market value of $5 trillion this month. Investors are worried that any signs of weakness could be a reason to burst the artificial intelligence bubble. For months, they have carried fears that the hundreds of billions of dollars invested in this area could be excessive.

Stephen Innes from SPI Asset Management stated, "The artificial intelligence complex was undoubtedly regarded as the locomotive of the 2025 rally; now, it sounds like a straining spring." He added, "This is neither a collapse nor a panic, nor is it fully a correction; it is merely a market that trades at high altitudes with oxygen debt becoming aware of how thin the air has gotten."

Innes noted that Wall Street's losses over four consecutive days in the S&P 500 index, the VIX "fear index" reaching 25, and the change in tone indicate signs that investors are finally awakening to the pace and scale of the artificial intelligence expansion era.

On the other hand, a survey conducted by Bank of America revealed that more than 50% of fund managers believe that artificial intelligence stocks are already in a bubble. 45% expressed that this is the biggest "risk" for the markets. These concerns arose after an interview with Sundar Pichai, CEO of Alphabet, Google's parent company. Pichai stated that if the artificial intelligence bubble were to burst, all companies would be affected.

After the recent difficult period, Asian markets experienced a slight stabilization, albeit with fluctuations. Tokyo showed a slight increase, while rising Chinese tensions and questions regarding Japan's financial situation impacted stocks ahead of the economic stimulus package. Hong Kong, Shanghai, Sydney, Singapore, Taipei, and Manila gained value, while Seoul, Wellington, and Jakarta fell.

This week, important data from the U.S., especially related to job creation, will be closely monitored. These data will provide clues about the Federal Reserve's plans regarding interest rates. Investors have reduced their expectations for a third consecutive rate cut for next month, which has recently put pressure on the markets. Decision-makers, including Jerome Powell from the bank, questioned whether another cut is necessary, emphasizing that inflation remains at high levels.

Important Data (GMT)
Tokyo - Nikkei 225: up 0.8% at 49,077.49
Hong Kong - Hang Seng Index: up 0.1% at 25,943.80
Shanghai - Composite: up 0.2% at 3,947.68
Dollar/yen: down 0.01% to 155.52
Euro/dollar: down 0.3% to $1.1577
Pound/dollar: down 0.1% to $1.3134
Euro/pound: up 0.1% at 88.15
West Texas Intermediate Crude Oil: down 0.3% to $60.58
Brent North Sea Crude: down 0.3% to $64.67
New York - Dow: down 1.1% to 46,091.74 (close)
London - FTSE 100: down 1.3% to 9,552.30 (close)