SK Hynix reports more than sevenfold rise in quarterly operating profit
SK Hynix reported a more than sevenfold rise in quarterly operating profit, lifting South Korean shares more than 3% and reigniting the AI trade across Asia on Wednesday, according to Token Times. MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.85% in early trade, Japan's Nikkei added 1.2% and the KOSPI jumped over 3%, while SK Hynix itself traded 1.75% higher after gaining 3% at the open.
The rally now faces its next test when Alphabet and Microsoft report earnings after the US close. Investors are looking for evidence that heavy spending on AI infrastructure will produce returns. "While we’re expecting strong results across the board, the focus is less about the actual earnings results than about whether the capex spending for AI growth will translate into sustainable revenue growth for these companies, which remains a big question mark," said SWBC chief investment officer Chris Brigati. He added that the period of a rising market lifting all stocks has started to shift, with future expectations more focused on execution risk and how much future success is already embedded in the current stock price.
A series of AI-related funding announcements from Meta, SpaceX and Broadcom this week has breathed new life into the trade, with sentiment further boosted by Anthropic's initial public offering filing, according to Token Times. US futures were little changed and EUROSTOXX 50 futures edged 0.03% lower.
Attention now turns to the Federal Reserve's policy decision later on Wednesday, where a steady outcome is widely expected. JPMorgan analysts said in a client note they anticipate at least two hawkish dissents, and that how Chair Kevin Warsh frames the decision will draw scrutiny. The dollar index held near a two-week high at 102.37 against six major currencies.
Elsewhere, the New Zealand dollar fell more than 1% after the Reserve Bank of New Zealand left its policy rate unchanged, confounding market expectations. The Australian dollar rose 0.25% to $0.7043 after data showed consumer prices rose sharply in the third quarter as fuel costs climbed, with core inflation still uncomfortably hot. The shekel weakened after exit polls showed Israel's wartime election deadlocked. Brent crude rose 0.47% to $114.42 a barrel and US crude added 0.55% to $100.45 as an agreement to end the US-Israeli war with Iran remained elusive, while spot gold was largely flat at $4,057.95 an ounce.
