Asian shares experienced mixed results on Thursday, reflecting investor anxiety following the release of Oracle’s earnings, which heightened concerns about the sustainability of artificial intelligence investments. The U.S. stock market approached record highs after the Federal Reserve cut its main interest rate, although comments from Fed Chair Jerome Powell hinted at further potential cuts in 2026.
While the Fed’s rate cut was anticipated, it did not significantly impact market momentum. U.S. futures and oil prices declined, and Oracle’s disappointing earnings report caused a notable reaction in technology stocks across Asia. The company’s shares plummeted by 11.5% in after-hours trading, leading analysts like Ipek Ozkardeskaya from Swissquote to express concerns about Oracle’s heavy spending on AI, financed largely by debt.
“Frankly, the report was not dramatically bad, but it came to confirm concerns around heavy AI spending, financed by debt, with an unknown timeline for revenue generation,” Ozkardeskaya commented.
Market Responses Across Asia
In Tokyo, the Nikkei 225 index fell by 0.9%, closing at 50,148.82. This decline was driven in part by a 7.7% drop in shares of SoftBank Group Corp., a major player in AI investments. Local shares are also feeling pressure as expectations grow that the Bank of Japan will raise interest rates at its upcoming meeting.
Meanwhile, Hong Kong’s Hang Seng index gave up earlier gains, slipping 0.1% to 25,513.38. The Hong Kong Monetary Authority followed the Federal Reserve’s lead, reducing borrowing costs to 4.00%, the lowest since October 2022. The Shanghai Composite index also fell by 0.7% to 3,873.32, reflecting cautious sentiment ahead of China’s credit data for November. Recent figures revealed a sharp decline in new yuan loans for October, indicating weaker consumer demand and missing market forecasts.
In Australia, the S&P/ASX 200 saw a slight increase of nearly 0.2% to 8,592.00, supported by gains in gold and mining stocks. Notably, the seasonally adjusted unemployment rate in November remained steady at 4.3%, slightly better than the anticipated 4.4%.
South Korea’s Kospi index dipped 0.6% to 4,110.62, with chipmaker SK Hynix falling 3.8% after the nation’s main stock exchange issued warnings regarding its rapid growth this year. Taiwan’s Taiex index closed 1.3% lower, while India’s BSE Sensex managed a modest rise of 0.4%.
U.S. Market Developments
On Wall Street, the S&P 500 climbed 0.7% to 6,886.68, nearing its all-time high from October. The Dow Jones Industrial Average increased by 1% to 48,057.75, and the Nasdaq Composite grew by 0.3% to 23,654.16. Lower interest rates generally boost the economy, prompting investment increases, despite potential inflation risks.
Wednesday’s interest rate cut did not significantly sway markets on its own. However, Powell’s remarks appeared to suggest a less aggressive stance on future cuts than investors had anticipated. He noted that the central bank faces a challenging situation, with a slowing job market and inflation pressures. Powell indicated that interest rates are currently positioned to neither exacerbate inflation nor support job growth, allowing the Fed to reassess its approach as more data emerges.
In other developments, shares of GE Vernova surged 15.6% after the energy company raised its revenue forecast for 2028, announced a dividend increase, and expanded its stock buyback program. Palantir Technologies and Cracker Barrel Old Country Store also gained by 3.3% and 3.5%, respectively.
As trading continued, U.S. benchmark crude oil prices fell by 31 cents to $58.15 per barrel, while Brent crude, the global standard, dropped by 34 cents to $61.87 per barrel. The U.S. dollar strengthened slightly against the Japanese yen, moving to 156.04 from 156.02, while the euro dipped to $1.1687 from $1.1696.
The mixed performance across Asian markets illustrates the ongoing uncertainties surrounding technology investments and central bank policies, as investors remain vigilant for further developments.
