Stocks mostly bounce back after rout fuelled by AI angst
Stock markets rallied Friday after worries about the AI boom sparked heavy selling in recent sessions, with Federal Reserve chairman Kevin Warsh saying the technology offered huge benefits to the global economy.
Reassuring comments from Jensen Huang, head of the chip giant Nvidia, on the financial health of US neocloud CoreWeave also drew investors back into tech stocks ahead of the weekend.
The Seoul and Tokyo indices led gains in Asia thanks to strong bounces by the chipmakers SK hynix and Kioxia, which helped lift sentiment on European stock markets.
Wall Street opened mixed, with the Dow up, the S&P flat and the tech-heavy Nasdaq down after a volatile week sparked by fears that client spending on AI models is not matching the sector's massive investments.
"After being supported by growth prospects for so long, the AI sector is now entering a new phase: one of proving its profitability," said Gregoire Kounowski, an adviser at the investment group Norman K.
However, "The strings have been pulled back to the AI trade after a big player helped calm nerves about whether the mega spending spree on the infrastructure build-out will reap enough rewards," said Susannah Streeter, chief investment strategist at Wealth Club.
"Jensen Huang, who brings the tech world to attention whenever he has a mic, has justified his company's investment in cloud infrastructure provider CoreWeave, saying its situation was improving," she added.
Markets had been spooked by concerns about CoreWeave's huge debt pile, which saw its shares tank 15.5 percent Wednesday as yields on some of its bonds soared, reflecting heightened angst over its future.
But Huang lifted spirits Thursday by defending the company and its health, and CoreWeave shares rallied in response -- though they fell back by over seven percent in early New York trading Friday.
- 'Bumpy' AI path -
Further stoking the gains was Warsh's speech at the IMF and World Bank meetings in Bangkok, where the Fed chief said AI was the "most consequential change" to the global economy in his lifetime.
He said the investment boom would drive prices up in the short term, but "there really is, I think, a huge benefit to the global economy, to the US economy over the horizon."
Nonetheless, "the path from where we are to there is likely to be a very bumpy one, bumpy in our understanding of the technology, bumpy because we really don't know what the market structure is going to be of these new technologies," he said.
Elsewhere, the Jakarta stock market tanked more than 11 percent, its heaviest loss since 1998, after index compiler MSCI said transparency concerns meant it was "no longer appropriate" to maintain Indonesia's emerging-market status.
A downgrade to "standalone" status could see an exodus of foreign investment in the Indonesian market.
- Key figures at around 1340 GMT -
New York - Dow: UP 0.5 percent at 52,431.28 points
New York - S&P 500: FLAT at 7,742.43
New York - Nasdaq: DOWN 0.6 percent at 26,546.88
London - FTSE 100: UP 0.4 percent at 10,886.71
Paris - CAC 40: UP 0.5 percent at 7,972.12
Frankfurt - DAX: UP 1.2 percent at 25,677.09
Tokyo - Nikkei 225: UP 1.4 percent to 65,324.29 (close)
Seoul - Kospi: UP 2.1 percent to 5,668.05 (close)
Hong Kong - Hang Seng Index: UP 0.5 percent to 24,186.83 (close)
Shanghai - Composite: UP 0.2 percent to 3,716.28 (close)
Brent North Sea crude: DOWN 0.2 percent at $105.74 per barrel
West Texas Intermediate: FLAT at $97.95 per barrel
Euro/dollar: UP at $1.1249 from $1.1213 on Thursday
Pound/dollar: UP at $1.3347 from $1.3274
Dollar/yen: DOWN at 157.94 yen from 158.12 yen
Euro/pound: DOWN at 84.29 pence from 84.47 pence
E.Reid--TNT
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