Key facts
- Asian stocks rallied, driven by AI enthusiasm and SK Hynix's strong quarterly profit.
- Investors are focused on whether AI build-out spending will translate into sustainable revenue growth.
- The Federal Reserve is expected to hold interest rates steady, with focus on rate outlook commentary.
- The dollar index held near a two-week high ahead of the Fed decision.
- New Zealand unexpectedly kept interest rates unchanged, weakening the kiwi dollar.
- Australian inflation rose sharply in the third quarter.
Asian stocks rallied on Wednesday, buoyed by renewed enthusiasm for artificial intelligence and strong earnings from South Korean chipmaker SK Hynix. Investors are closely watching upcoming earnings reports from tech giants Alphabet and Microsoft for signs that AI build-out spending is translating into sustainable revenue growth.
Ahead of US earnings, MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.85%, with Japan's Nikkei up 1.2% and South Korea's KOSPI jumping over 3%. SK Hynix shares initially rose 3% before paring gains to trade 1.75% higher.
Market sentiment has been boosted by recent AI-related funding announcements and Anthropic's IPO filing. US futures were little changed, while European futures edged lower.
Investors are also focused on the Federal Reserve's policy decision later on Wednesday, with a steady outcome widely expected. Attention will be on the central bank's commentary regarding the future path of interest rates amid ongoing inflation concerns and the conflict in the Middle East.
In currency markets, the dollar index held near a two-week high. The New Zealand dollar tumbled over 1% after the Reserve Bank of New Zealand unexpectedly kept rates unchanged. The Australian dollar rose after strong consumer price data, while the Israeli shekel weakened amid election uncertainty.
Oil prices edged higher, with Brent crude futures up 0.47% and US crude up 0.55%.