Asian Stocks Rise Following Tech Gains in Wall Street, Concerns Persist

Oil prices retained most losses from earlier declines linked to a G7 announcement on stockpiles, Saudi Arabia's price cuts, and a rise in Gulf oil exports to pre-war levels. Still, supply concerns have kept prices elevated.

The US Nasdaq hit a new high, driven by strong performances from tech giants like Nvidia, SpaceX, and Meta. Analysts cautioned that these market gains are increasingly dependent on a limited number of stocks.

Initial trading in Asia did not fully reflect Wall Street's positive momentum, but markets gained strength as the day progressed. The Nikkei 225 in Tokyo rose over one percent, and other markets, including Hong Kong, Sydney, Singapore, Mumbai, Bangkok, Jakarta, and Wellington, also saw increases, while Seoul and Manila experienced slight declines. Shanghai was closed for a holiday.

European markets opened higher, with London, Paris, and Frankfurt showing positive movement.

Traders remain cautious amid the ongoing crisis in the Middle East, which is driving energy prices higher and increasing inflationary pressures. This situation has led to rising government bond yields, reaching levels not seen in decades.

Analysts noted that the demand for AI infrastructure has exacerbated borrowing issues for tech companies, which are no longer able to solely depend on their cash reserves. Borrowing by companies such as Google, Amazon, and Microsoft reached approximately $500 billion in the first nine months of the year, with Goldman Sachs predicting an increase to $1.2 trillion by 2027.

Chris Della Fave, a senior vice president at Post Oak Group, remarked that AI now represents 25 percent of corporate bond issuance, a significant rise from 4 percent just two years ago.

Oil prices fell further, with Brent crude dropping below $100. However, Saudi Aramco's CEO, Amin Nasser, stated that the global supply system is under strain, noting that "the system is already straining" and warning of thin supply resilience.

Despite attacks on vessels in the Strait of Hormuz, Middle Eastern oil exports, excluding Iran, exceeded pre-war levels last week, according to Kpler. Nasser cautioned against focusing solely on reserve headlines, indicating that less than 10 percent were actually available.

FOREX.com's Fiona Cincotta highlighted that heightened tensions in the Middle East could impact oil prices, particularly if shipping or regional supply faces further disruptions. She emphasized the challenge of balancing improving crude supply against geopolitical risks, stating that a sustained drop in energy prices could alleviate some inflationary pressures affecting central banks.

Key market indicators included:

- Tokyo - Nikkei 225: UP 1.1 percent at 70,683.98 (close)

- Hong Kong - Hang Seng Index: UP 0.8 percent at 24,221.54

- London - FTSE 100: UP 0.5 percent at 10,552.18

- Shanghai - Composite: Closed for a holiday

- Dollar/yen: DOWN at 158.10 yen from 157.99 yen on Monday

- Euro/dollar: DOWN at $1.1210 from $1.1217

- Pound/dollar: DOWN at $1.3215 from $1.3221

- Euro/pound: DOWN at 84.83 pence from 84.84 pence

- West Texas Intermediate: DOWN 0.7 percent at $88.78 per barrel

- Brent North Sea Crude: DOWN 0.6 percent at $99.73 per barrel

- New York - Dow: UP 0.2 percent at 51,267.90 (close)