A rise in technology companies contributed to Tokyo's Nikkei leading most Asian stocks upward on Friday, as investors entered the weekend with a generally optimistic outlook, with expectations of US interest rate reductions overshadowing worries about a government shutdown.
This year's global market rally has mainly been driven by companies investing billions of dollars into all aspects of artificial intelligence, with traders eager not to miss the opportunity.
This has driven the valuations of some of the most prominent companies to staggering figures — with U.S. semiconductor giant Nvidia surpassing $4 trillion — and various markets reaching historic peaks.
This week has brought increased momentum following reports that South Korean semiconductor leaders Samsung and SK hynix have reached an initial agreement with ChatGPT's parent company, OpenAI, to provide chips and other components for its Stargate project.
And on Friday, Japan's Hitachi took its turn, announcing that it has entered a strategic collaboration with OpenAI to focus on AI and energy, along with other areas.
Hitachi surged over nine percent, with other Japanese technology companies also experiencing gains, as Renesas climbed by a comparable figure, Sony increased by 2.8 percent, and Advantest rose by more than three percent. Tech investment leader SoftBank also saw a gain of over three percent.
The boost contributed to a significant rise in Tokyo's Nikkei, along with increases in Sydney, Wellington, Taipei, Jakarta, and Manila.
Hong Kong fell slightly after rising over four percent in the past three trading sessions, while Singapore also experienced a minor decline. Shanghai remained closed due to a holiday.
The event, which led all three major Wall Street indices to reach record highs on Thursday, has also been fueled by recent data indicating a cooling in the US job market.
This has caused the Federal Reserve to lower interest rates and signal further actions ahead.
The optimistic outlook has taken precedence over the conflict in Washington, which has resulted in a partial government shutdown, causing some services to close and potentially delaying the release of important employment data later today.
Although non-farm payrolls (NFPs) serve as a key indicator for the Fed in shaping monetary policy, analysts believe the government shutdown is unlikely to prevent the central bank from proceeding with a second rate reduction this month.
"The overall sentiment is that the government shutdown might reduce US GDP by $15 to $20 billion, but it is expected to be compensated for, resulting in minimal long-term effects on economic activity," noted Chris Weston from Pepperstone.
Still, there are factors that suggest Trump's warning to indefinitely suspend some government employees might lead to a broader market risk scenario.
Nevertheless, he mentioned that "the likelihood is that the US government will resume operations in time for the NFP and potentially even the (consumer price) reports to be published before the upcoming (Fed policy) meeting on 29 October".
A vote in the Senate is anticipated on Friday regarding a resolution approved by the House, aimed at maintaining government funding at existing levels until November 21.
In corporate updates, the Japanese beer giant Asahi experienced a drop in morning trading following a cyber attack that disrupted its order and delivery systems, leading to production halts at certain facilities. Representatives from the company mentioned they are unsure about when operations will resume.
Prominent individuals around 0230 GMT
Tokyo - Nikkei 225: Increased by 1.4 percent to 45,584.54 (break)
Hong Kong - Hang Seng Index: Decreased by 0.6% to 27,125.17
Shanghai - Composite: Closed on a holiday
Euro/dollar: Increased to $1.1725 from $1.1720 on Thursday
Pound to dollar: Decreased to $1.3441 from $1.3446
Dollar/Yen: Increased to 147.61 yen from 147.19 yen
Euro/pound: Increased to 87.22 pence from 87.17 pence
West Texas Intermediate: Increased by 0.4 percent to $60.73 per barrel
Brent Oil from the North Sea: Increased by 0.4% to $64.35 per barrel
New York - Dow: Increased by 0.2% to 46,519.72 points (closing value)
London - FTSE 100: Decreased by 0.2% to 9,427.73 (closing value)
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