Asian stocks climb as sliding oil prices buoy sentiment

SINGAPORE: Asian stocks rose on Tuesday as a drop in oil prices after US President Donald Trump said he plans to hold off on new military strikes ​against Iran lifted sentiment ahead of US inflation data that could sway the near-term interest rate outlook.

Brent crude futures were hovering at their lowest ‌levels since early September, well below $100 per barrel, as investors pinned their hopes on possible talks between US and Iran.

They were last down 1% at $91.56 a barrel.

The US-Israeli war with Iran, which erupted at the end of February, has stoked inflationary concerns across the globe, spurring major central banks to raise rates in recent months.

Nick Twidale, chief market strategist at ATFX Global, said the latest ​developments offered hope that an end to the conflict could be approaching, but there was still a considerable gap between diplomacy and a lasting ​peace agreement.

“The risk now is that markets have moved too far, too quickly … any indication that negotiations are faltering could see a ⁠substantial rebound in prices as traders rapidly rebuild the geopolitical risk premium,” he said.

The slump in oil prices eased inflation worries and helped lift stocks after last ​week’s rout as a sweeping victory by Democrats in the US midterm elections fed concerns that new regulations could dent the durability of the AI trade.

South Korea’s ​KOSPI rose over 5%, while Japan’s Nikkei gained about 3% in early trading. MSCI’s broadest index of Asia-Pacific shares pushed 1.5% higher, moving away from the seven-month low it hit last week.

On Monday, the S&P 500 clocked its biggest one-day jump since April, closing up 2.35% while the Nasdaq closed 2.7% higher, its best day in over four months.

“We believe resets in expectations ​are healthy, and the AI trade appears to be working through a reset of its own at the moment,” said Anthony Saglimbene, chief market strategist at Ameriprise.

Earnings ​reports due this week from tech companies including CoreWeave, a barometer of investor anxiety over AI, will be another test for markets as investors fret about the cost of the ‌AI buildout.

Saglimbene ⁠said Anthropic’s prospective IPO could be an important test of investor confidence.

Nvidia remains at the centre of storm

Market focus remains on Nvidia after the second-most valuable company in the world said its board was probing whether CEO Jensen Huang had been the target of a foreign intelligence operation.

A media report alleged he had a close relationship with a Chinese businesswoman who passed information to Beijing. Huang has said he was unfaithful to his wife without disclosing details. Shares of Nvidia, which is due ​to report earnings next week, fell 4.2%.

Daniel ​Morgan, portfolio manager at Synovus Trust, ⁠said certain personalities in the technology space were so intertwined with the success of the company it was hard to separate the two. Morgan holds Nvidia shares.

“But, the companies can still be successful long after the original founders have taken on ​a lesser role,” he said, adding he remained confident that Nvidia would continue to maintain its lead in the GPU ​AI chip market even ⁠if Huang was forced to step down to a lesser role.

Inflation data sets up rates outlook

All eyes will be on US inflation data later in the day, with prices likely to have increased at a moderate pace in October, economists said, and remaining stubbornly high enough for the Federal Reserve to raise interest rates next month.

Economists polled by Reuters ⁠expect headline ​consumer prices to have risen 0.3% last month, with core prices posting a 0.2% increase.

Traders are ​pricing in an 84% chance of a rate hike next month versus 74% a week earlier, a CME FedWatch tool showed after a blowout October jobs report on Friday.

The 2-year note yield, which typically moves in ​step with Fed interest rate expectations, was 1.4 basis points higher to 4.56%. The US dollar was steady in Asian hours.