Asian shares displayed a mixed performance on Thursday as concerns over artificial intelligence spending were reignited by weaker-than-expected earnings from Oracle, a significant player in the sector. The U.S. stock market had approached record highs following the Federal Reserve’s recent interest rate cut, but this optimism was tempered by the fallout from Oracle’s results.
U.S. futures and oil prices declined after the Federal Reserve announced its decision to lower the main interest rate, a move that many analysts anticipated. Fed Chair Jerome Powell suggested the possibility of further cuts in 2026, causing some to speculate on the future direction of monetary policy. Despite this, shares of Oracle plummeted by 11.5% in aftermarket trading, raising alarms about the company’s substantial investments in AI funded by debt. Ipek Ozkardeskaya of Swissquote commented, “Frankly, the report was not dramatically bad, but it confirmed concerns around heavy AI spending, financed by debt, with an unknown timeline for revenue generation.”
Market Reactions Across Asia
In Tokyo, the Nikkei 225 index fell 0.9% to 50,148.82, largely influenced by a 7.7% drop in shares of SoftBank Group Corp., a prominent investor in AI technologies. Local stocks faced additional pressure from rising expectations that the Bank of Japan will consider increasing interest rates in its upcoming meeting.
Hong Kong’s Hang Seng index, which had initially gained, closed down 0.1% at 25,513.38 after the Hong Kong Monetary Authority followed the Fed’s lead by reducing borrowing costs to 4.00%, the lowest since October 2022. The Shanghai Composite index also experienced a downturn, falling 0.7% to 3,873.32 as market sentiment remained cautious ahead of China’s November credit data. New yuan loans had sharply declined in October, missing expectations and reflecting weaker consumer demand.
In Australia, the S&P/ASX 200 index managed to gain nearly 0.2% to 8,592.00 after three consecutive days of decline, supported by strong performances in the gold and mining sectors. The country’s seasonally adjusted unemployment rate remained stable at 4.3% for November, slightly below the expected 4.4%.
South Korea’s Kospi index fell 0.6% to 4,110.62, with shares of chip manufacturer SK Hynix dropping 3.8% following warnings from the main stock exchange regarding its rapid rise this year. Meanwhile, Taiwan’s Taiex index closed down 1.3%, while India’s BSE Sensex saw a modest increase of 0.4%.
Wall Street’s Performance 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 increased by 1% to 48,057.75, and the Nasdaq composite rose 0.3% to 23,654.16. The Federal Reserve’s rate cut did not significantly impact markets on its own, but Powell’s comments regarding the delicate balance between the job market and inflation provided some optimism for investors.
Powell noted the challenges the central bank faces, as the job market is slowing while inflation pressures remain. He emphasized that rates are currently positioned in a way that does not significantly influence either inflation or employment. This gives the Fed time to evaluate its next moves based on forthcoming economic data.
In corporate news, GE Vernova surged 15.6% following an upward revision of its revenue forecast through 2028, alongside a doubled dividend and an expanded share buyback program. Palantir Technologies and Cracker Barrel Old Country Store also saw gains of 3.3% and 3.5% respectively.
In the commodities market, U.S. benchmark crude oil slipped 31 cents to $58.15 per barrel, while Brent crude fell 34 cents to $61.87 per barrel. The U.S. dollar strengthened slightly against the Japanese yen, rising to 156.04 from 156.02, while the euro decreased to $1.1687 from $1.1696.
As investors process these developments, the focus will remain on the implications of Oracle’s earnings and the broader effects of interest rate decisions on the global economy.
