Market Momentum: Tech Stocks Soar as AI Takes Center Stage
The US stock market witnessed a remarkable surge on Monday, with the S&P 500 and Nasdaq Composite indices rising for the second consecutive day. The tech sector was the driving force behind this rally, led by artificial intelligence (AI) giant Nvidia, which closed at a record high.
Asia-Pacific Markets React to US Developments
In Asia, markets responded positively to the US rally, with Japan’s Nikkei 225 index surging over 2%. However, Hong Kong’s Hang Seng index dropped nearly 2% after the US Department of Defense added several Chinese companies, including Tencent Holdings, to its list of “Chinese military companies.”
Tencent Denies Military Ties
Tencent Holdings, a leading Chinese technology firm, saw its Hong Kong-listed shares plummet 7% after being added to the US Department of Defense’s list. The company has since denied any military ties, calling the inclusion a “clear mistake.”
Nippon Steel Pursues US Acquisition
Nippon Steel, a Japanese steelmaker, is pushing forward with its $14.9 billion acquisition of US Steel, despite the Biden administration’s decision to block the deal. The company has initiated two lawsuits against the administration, reiterating its commitment to the acquisition.
Nvidia Unveils AI-Powered Graphics Chips
At the Consumer Electronics Show (CES), Nvidia announced new graphics chips for PCs that utilize the same architecture as its fastest AI processors for servers and data centers. The move is seen as a significant development in the AI sector, which has been driving growth in the tech industry.
Foxconn’s Record Revenue Fuels AI Optimism
Foxconn, a Taiwanese electronics manufacturer, reported a 15% year-over-year increase in fourth-quarter revenue, the highest in the company’s history. The growth was partly driven by its cloud and networking products, including AI servers designed by Nvidia. The news sent semiconductor stocks soaring, with the VanEck Semiconductor ETF jumping over 3%.
ETFs Outperform S&P 500
Actively managed funds in Europe have outperformed the S&P 500, with one ETF returning 30%. The trend suggests that investors are seeking exposure to specific sectors, such as AI, which are driving growth in the market.
Market Outlook: Rocky Road Ahead
Despite the current optimism, analysts warn that the year ahead may be rocky. Valuations appear restrictive, and the true test for AI will be whether companies can leverage it to boost revenue, rather than just sending stock prices higher.
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