Asian stocks rise on AI rally, while US futures edge higher

Asian equity markets opened higher Tuesday, driven by a rebound in artificial intelligence shares following a strong session on Wall Street. Investors are positioning ahead of a wave of major corporate earnings and central bank decisions that will test the durability of the current tech-led market advance.

In South Korea, the Kospi index jumped more than 4 percent before moderating to a 3.6 percent gain, closing near 5,667.99 by midday. The surge was led by semiconductor manufacturers, with SK Hynix climbing 7 percent and Samsung Electronics rising 4.8 percent. Tokyo's Nikkei 225 added 2.2 percent to reach 63,542.77, supported by a 10 percent jump in testing equipment maker Advantest and a 7 percent climb in SoftBank Group, an investor in OpenAI.

Contrasting performance was seen in mainland China and Hong Kong. The Hang Seng Index gave up early gains to slip 0.2 percent to 23,174.44, while the Shanghai Composite edged down 0.1 percent to 3,692.58. Traders monitored developments from a closed-door plenum of China's ruling Communist Party for potential policy announcements. Elsewhere in the region, Taiwan's Taiex rose 0.5 percent and Australia's S&P/ASX 200 advanced 0.3 percent to 8,838.10.

The momentum in Asia followed a recovery on U.S. exchanges Monday, where the S&P 500 rose 0.7 percent and narrowed its distance from the all-time high set earlier this month to within 1.8 percent. Nvidia, the key driver of the AI trade, gained 2.4 percent, helping it recover from its longest losing streak since June. However, sentiment across the broader AI sector remained volatile due to concerns over the high cost of borrowing for data center construction and chip purchases.

Corporate moves continued to shape the narrative. Meta Platforms saw share price fluctuations after announcing plans to raise $35 billion through a stock sale to fund AI investments, with Nvidia, Advanced Micro Devices, and Broadcom indicating interest in purchasing $5 billion of the offering. Meanwhile, Anthropic disclosed its financial losses ahead of a planned initial public offering, and SpaceX announced a $40 billion deal with an Apollo Global Management entity for AI computing power leases.

This week's earnings reports from Alphabet and Microsoft on Wednesday, followed by Amazon on Thursday, will provide further insight into AI spending efficiency. Approximately one-third of S&P 500 companies are scheduled to report results during the week.

In fixed income markets, the yield on the 10-year Treasury eased to 4.98 percent from 5.00 percent late Friday, while the two-year yield rose to 4.71 percent from 4.69 percent. The two-year yield tracks Federal Reserve policy expectations, with widespread anticipation that the central bank will hold rates steady at its meeting concluding Wednesday. The Fed hiked rates last month for the first time in three years to combat persistent inflation.

Commodities and currencies showed mixed signals early Tuesday. Brent crude oil fell 0.8 percent to $109.82 a barrel, and U.S. benchmark crude dropped 0.8 percent to $100.93 per barrel. The dollar strengthened against the Japanese yen, rising to 157.65 from 157.50, while the euro slipped slightly to $1.1173 from $1.1176.