Asian stocks surge as Anthropic IPO lifts sentiment ahead of earnings

Asian stocks surged on Tuesday as AI bellwether Anthropic’s eagerly anticipated IPO filing lifted risk appetite ahead of tech earnings that will be a test for the AI trade, and central bank meetings that will influence near-term interest rates.

Claude-owner Anthropic disclosed steep loss and red-hot revenue growth in its filing for a US initial public offering, as investors increasingly dissect the potential payoff from massive AI spending and its profitability.

Also boosting sentiment was Meta Platforms’ plans to raise up to US$95 billion in its largest-ever equity fundraising.

The currency markets are muted ahead of policy decisions from the Federal Reserve, European Central Bank and Bank of Japan, with economists expecting all three to stand pat on interest rates, leaving the focus on comments from policymakers to gauge the rates outlook.

In stocks, tech-heavy South Korea’s KOSPI gained more than 4% in early trading while Japan’s Nikkei was 1.9% higher. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.2%.

Nasdaq futures was up 0.4% after US chip stocks rose 2.8% in overnight trade, clocking its biggest one-day jump in a month. European stock futures dipped 0.23%.

More than a third of S&P 500 companies are scheduled to report earnings this week, including hyperscalers Alphabet, Microsoft and Amazon.com.

“Given the increased AI scrutiny of late and circular arrangements, investors will want evidence that demand is broadening beyond these interconnected relationships to support the continued infrastructure expansion,” said Anthony Saglimbene, Ameriprise’s chief market strategist.

“Investors need confidence that aggressive capex spending reflects durable business needs and that profitability will hold up as new infrastructure comes into service,” he said.

Brent crude futures eased 0.7% to US$114.95 a barrel, drifting away from a six-month high as investors weighed the potential for a resolution in the US-Israeli war with Iran, keeping supply fears at bay though sentiment remained fragile.

Nick Twidale, chief market strategist at ATFX Global, said supply remains the key concern, and any developments that threaten physical exports could see Brent quickly retest recent highs and potentially push back towards US$120.

The nearly eight-month-old war has rippled across the Middle East, sending oil prices higher, stoking inflation worries and upending the global interest rates outlook, sharpening the focus on the central bank decisions this week.

Fed policymakers have telegraphed they will not raise short-term borrowing costs again this week, but with inflation concerns still front and centre, investors believe a rate-hike pause will not last for long. Traders are pricing in a hike from the Fed in December.

“Can we expect (US) growth to hold up in an environment of higher rates?,” Geng Ngarmboonanant, head of macro and policy, multi-asset solutions, J.P. Morgan Asset Management, said.

“We think yes. We believe the US economy is going to be able to manage through higher interest rates.”

The yield on the US 10-year Treasury note was steady at 4.992%, staying below 5% which it breached in September as investors scurried to Treasuries for safety during stock market tumult over AI worries.

The Japanese yen has been the haven of choice in currency markets and was last at 157.72 per dollar ahead of the BOJ decision on Friday.

The Japanese central bank is widely expected to declare victory in a nearly 14-year battle to hit its 2% inflation target on Friday and emphasise the risk that prices could overshoot, signalling the chance of an interest rate hike as soon as December.

In commodities, gold eased a touch and was last at US$4,013.70 per ounce.

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