Asia stocks rise on tech recovery, Dec rate cut bets

Investing.com-- Most Asian stocks rose on Tuesday as technology shares tracked an overnight rebound in their U.S. peers, while growing confidence that the U.S. Federal Reserve will cut interest rates in December also aided risk appetite.

But overall gains were limited amid caution over a diplomatic row between China and Japan and fiscal risks in the developed world. Tech shares were also nursing steep losses in recent sessions. 

Asian markets took a positive lead-in from Wall Street, which rebounded overnight on a rally in tech shares. Improving sentiment towards artificial intelligence was a key driver of the tech rally, while markets also increasingly priced in expectations for a rate cut in December. 

S&P 500 Futures were flat in Asian trade, with investors now awaiting a host of long-delayed official readings for more cues on the U.S. economy. 

Asia stocks rise as tech rebounds 

Tech-heavy Asian bourses were the best performers for the day, with Hong Kong’s Hang Seng index rising 1.2%, while South Korea’s KOSPI added 0.9%. 

Sentiment towards tech was aided by optimism over a new AI model from Google, while reports that the company was planning to develop its own AI chips also helped.

Tech saw a heavy dose of bargain buying after doubts over the AI trade and valuations drove deep losses over the past month. South Korean stocks were among the worst hit by this trade, given that a big portion of the KOSPI comprises tech.

Hong Kong shares advanced on gains in local internet giants, with Alibaba Group (HK:9988) up nearly 3% before its quarterly earnings due later in the day. The stock was sitting on strong gains from the prior session after Alibaba’s Qwen AI app gained over 10 million downloads in its debut week. 

Alibaba’s earnings are set to offer more cues on Chinese retail spending, while focus will also be on the company’s AI efforts, given that it is among the leading players in China’s AI industry. 

Mainland Chinese stocks also rose on a rebound in local tech and chip names. The Shanghai Shenzhen CSI 300 and Shanghai Composite indexes rose 1.4% and 1.2%, respectively. 

Japanese stocks lag amid fiscal concerns, China tensions 

Japanese stocks lagged their regional peers after a long weekend, with the Nikkei 225 up 0.6% and the TOPIX trading flat. 

While tech shares advanced, broader Japanese stocks were held back by persistent concerns over the country’s fiscal health, especially as Prime Minister Sanae Takaichi’s government prepares to ramp up spending. 

Longer-term Japanese government bond yields fell in recent sessions but remained close to multi-decade peaks hit last week. 

Concerns over a diplomatic row between Tokyo and Beijing, which showed few signs of ending, also weighed on Japanese shares, especially those in the travel and entertainment sectors. 

Airline shares ANA Holdings Inc (TYO:9202) and Japan Airlines Co Ltd (TYO:9201) fell 0.6% and 1.8% amid reports that thousands of Chinese travelers had cancelled flights to Japan. Chinese airline stocks also fell on the reports, extending losses from Monday. 

Other Asian stocks were muted. Australia’s ASX 200 fell slightly, as did Singapore’s Straits Times index.

Futures for India’s Nifty 50 index pointed to a flat open, after the index fell below 26,000 points in the prior session.