Asian markets exhibited a mixed performance on Thursday as concerns surrounding technology shares intensified, following disappointing earnings from Oracle, a prominent player in the artificial intelligence sector. The U.S. stock market had approached record highs after the Federal Reserve’s recent interest rate cut, but Oracle’s results raised questions about the sustainability of AI investments.
In the wake of the Federal Reserve’s decision to lower its main interest rate, U.S. futures and oil prices experienced declines. The Fed’s action was anticipated, but comments from Chair Jerome Powell sparked optimism for potential additional cuts in 2026. Despite the favorable backdrop, shares of Oracle plummeted by 11.5% in after-hours trading following their earnings report, which fell short of expectations. The company’s aggressive spending on AI, funded through debt, has led to concerns about cash flow and future profitability. Ipek Ozkardeskaya, a senior analyst at Swissquote, commented, “The report was not dramatically bad, but it confirmed worries regarding heavy AI spending, financed by debt, with an unknown timeline for revenue generation.”
Market Reactions Across Asia
In Tokyo, the Nikkei 225 index dropped 0.9% to 50,148.82, weighed down by a 7.7% decrease in shares of SoftBank Group Corp., a major AI investor. Local markets are also under pressure due to rising expectations that the Bank of Japan will increase interest rates during its upcoming meeting.
Hong Kong’s Hang Seng index lost earlier gains, concluding the day down 0.1% at 25,513.38. This follows the Hong Kong Monetary Authority mirroring the Federal Reserve’s decision by reducing borrowing costs to 4.00%, the lowest since October 2022. Meanwhile, the Shanghai Composite index fell 0.7% to 3,873.32, reflecting cautious sentiment ahead of expected credit data from China. The decline in new yuan loans during October points to weaker consumer demand, further impacting market outlook.
In Australia, the S&P/ASX 200 managed to gain nearly 0.2%, reaching 8,592.00, buoyed by strength in gold and mining stocks. Notably, the seasonally adjusted unemployment rate held steady at 4.3% in November, slightly better than the anticipated 4.4%. In South Korea, the Kospi index fell 0.6% to 4,110.62, with chipmaker SK Hynix seeing a 3.8% decline following warnings from the stock exchange about its rapid stock price increase. Taiwan’s Taiex index closed down 1.3%, while India’s BSE Sensex rose 0.4%.
U.S. Market Overview and Future Outlook
On Wall Street, the S&P 500 climbed 0.7% to 6,886.68, nearing its all-time high set in October. The Dow Jones Industrial Average surged 1% to 48,057.75, while the Nasdaq Composite increased 0.3% to 23,654.16. Wall Street generally favors lower interest rates, which can stimulate economic growth and elevate investment prices, despite the potential for exacerbating inflation.
The Fed’s recent interest rate cut did not significantly shift market dynamics on its own. Yet, investors found reassurance in Powell’s remarks, which suggested a more measured approach to future rate adjustments. Notably, Powell acknowledged the complexities the central bank faces, noting that addressing one issue often aggravates another. He emphasized that interest rates are currently positioned to neither escalate inflation nor adversely affect the job market, providing the Fed with the opportunity to reassess its strategy as new economic data emerges.
In other early trading on Thursday, U.S. benchmark crude oil prices fell by 31 cents to $58.15 per barrel, while Brent crude dipped 34 cents to $61.87. The U.S. dollar strengthened slightly against the Japanese yen, rising to 156.04 from 156.02, while the euro slipped to $1.1687 from $1.1696.
As markets navigate these mixed signals, investors will be closely monitoring developments in both the technology sector and broader economic indicators to inform their strategies moving forward.
