By Tom Westbrook
HONG KONG, Dec 11 (Reuters) – Stocks wobbled around Asia on Thursday after disappointing earnings at U.S. cloud computing giant Oracle sounded a warning for AI profitability, while bonds were firm and the dollar nursed losses after the Federal Reserve cut U.S. interest rates.
Oracle shares tumbled more than 11% after hours, dragging S&P 500 futures 0.3% lower and Nasdaq 100 futures down about 0.5% in Asia trade.
AI-related stocks were the biggest losers in Tokyo, as Oracle’s profit and revenue outlook missed forecasts and executives flagged higher spending – a sign that infrastructure outlays are not turning into profits as quickly as investors had hoped.
Japan’s Nikkei traded either side of flat in the morning session with a 5% drop in the AI-exposed SoftBank Group holding back the index. [.T]
Hong Kong’s Hang Seng rose 0.8% in early trade to put MSCI’s broadest index of Asia-Pacific shares outside Japan up 0.5%.
Overnight the Fed lowered its benchmark funds rate, as expected, by 25 basis points to 3.5-3.75%.
But Fed Chair Jerome Powell sounded balanced on the outlook at a news conference, easing market nerves about a hawkish message. Wall Street indexes rallied after the rate cut and the S&P 500 rose about 0.7%.
“I don’t think a rate hike is anyone’s base case,” Powell said.
That left interest rate futures with at least two rate cuts priced in for next year and undercut the dollar, which helped to send the euro through chart resistance and above $1.17.
Bonds caught a further boost as the Fed also announced it would start buying short-term Treasuries as soon as Friday to support liquidity.
Benchmark 10-year yields fell about two basis points to 4.14% and two-year U.S. yields are down around seven basis points at 3.54%.
Money markets had been volatile in recent weeks, leading to a premium on short-term rates as liquidity was stretched.
“The Fed doesn’t have a lot of appetite for that sort of thing to continue because it inhibits the transmission of monetary policy,” said ANZ senior rates strategist Jack Chambers.
DOLLAR SLIDES
Oil rose for a second straight session on Thursday after the U.S. seized a sanctioned oil tanker off Venezuela’s coast, escalating tensions and raising concern over supply disruption.
Brent and U.S. crude futures were up more than 30 cents to $62.53 and $58.85 a barrel, respectively.
In foreign exchange markets, the Fed decision and policymakers’ median projection for one cut in 2026 and 2027 opened the way for dollar selling.
The yen reversed a recent fall and rose to 155.66 per dollar in Asia trade on Thursday. The euro struck a two-month high of $1.1707, enjoying an extra boost from comments by European Central Bank President Christine Lagarde that another upgrade in European growth projections was possible.
Sterling, the Australian dollar and New Zealand dollar all made gains before steadying in the Asia session.
“The next big cue will be the November non-farm payrolls release on 16 December and whether a soft number can keep market pricing of two further rate cuts in 2026 intact,” analysts at ING said in a note.
“Seasonally, the dollar tends to weaken into year-end and with Fed event risk now out of the way, EUR/USD could have that run-up to 1.1800 after all.”
(Editing by Shri Navaratnam)
Comments