Asia stocks buoyed by tech gains, Japan at record high as rate hike bets unwind

Updates with India open, adds individual stock moves

Investing.com-- Asian stocks advanced on Tuesday as technology stocks tracked gains in their U.S. peers on persistent optimism over artificial intelligence.

Japanese markets continued to outperform, hitting fresh record highs after rallying as the election of a fiscally dovish prime ministerial candidate dampened bets on more interest rate hikes by the Bank of Japan. 

But Asian trading volumes were muted on account of market holidays in China, Hong Kong, and South Korea. 

Regional markets took positive cues from Wall Street, which clocked record highs on Monday amid strength in technology shares, especially chipmakers. 

But S&P 500 Futures fell 0.1% in Asian trade, indicating that a Wall Street rally may be cooling amid persistent concerns over an ongoing U.S. government shutdown. Several Federal Reserve officials, most notably Chair Jerome Powell, are set to speak this week. 

Globally, risk appetite was also dented by an ongoing political crisis in France. 

Nikkei pinned at records as Takaichi LDP win hits rate hike outlook 

The Nikkei 225 index rose as much as 1% to a record high of 48,544.0 points, while the TOPIX hit a peak of 3,248.39 points. Both indexes traded below their highs by 22:12 ET (02:12 GMT). 

Industrials continued to lead the index higher, while chipmakers also rose tracking gains in their U.S. peers. 

Japanese stocks rallied on Monday after conservative politician Sanae Takaichi was elected as the leader of the ruling Liberal Democratic Party over the weekend, setting her up to become Japan’s first female prime minister. A parliamentary session on the matter is set to take place in mid-October. 

Takaichi is widely viewed as a fiscal dove, and is expected to dole out more expansionary fiscal policies. She has also largely opposed the BOJ’s raising of interest rates, and has called for more accommodative policies to support a sluggish economy. 

The prospect of more government support boosted Japanese stocks, with industrials benefiting from bets that Takaichi’s government will ramp up spending on manufacturing and defense industries. 

But questions over just how Takaichi will fund additional fiscal spending remained, weighing on the Japanese yen and government bonds. 

Asia tech underpinned by AI cheer

Asian tech stocks were the best performers for the day, tracking overnight gains in their U.S. peers. Chipmakers advanced tracking a nearly 24% spike in AMD (NASDAQ:AMD), after the company won a deal to supply AI chips to OpenAI.

The deal spruced up hopes that AI demand will continue to support the tech and chip industry. Among individual movers, Taiwan’s TSMC (TW:2330) rose 2.5% and was close to a record high.

Japan’s Advantest Corp. (TYO:6857) and Tokyo Electron rose 2.2% and 1%, respectively, while Renesas Electronics Corp (TYO:6723) rallied 4.6%. 

Among broader Asian markets, Singapore’s STI index surged 0.9%, while Australia’s ASX 200 fell 0.3%.

Exchange operator ASX Ltd (ASX:ASX) fell nearly 2% after rival Cboe Global Markets Inc (NYSE:CBOE) was approved to operate as a listing market for securities, heralding more competition in the sector. 

Australian metals miner South32 Ltd (ASX:S32) outpaced local stocks, rising over 4% after it agreed to sell about $17.8 million worth of shares in Trilogy Metals Inc (TSX:TMQ) to the U.S. Department of War. 

Elsewhere, India’s Nifty 50 index rose 0.4% in morning trade after rising past 25,000 points in recent sessions. Focus is now squarely on the upcoming third-quarter earnings season, which is set to begin in earnest this week. 

Indian tech consulting giants Tata Consultancy Services Ltd. (NSE:TCS) and HCL Technologies Ltd (NSE:HCLT) are set to report on Thursday.