Asian stocks opened mixed on Thursday November 5, following Wall Street’s strong rally after the Democrats swept the US midterm elections, which sent oil sharply lower on hopes that the conflict with Iran will end sooner, though investor concerns over data centre development seemed to offer some restrain.
Equity benchmarks in Japan and Australia advanced, lifting the MSCI Asia Pacific Index by 0.3%. In Japan, the Nikkei 225 gained 0.40%, while the Topix rose 2.15%. Hang Seng futures climbed 2.1%.
South Korea bucked the trend, with the Kospi sliding 2.35% as investors fretted about the outlook for data-centre development and losses among US chip stocks.
In India, the GIFT Nifty pointed to a bumper start as the futures metric showed a 350 point gap-up start. The Nifty 50 has risen 6% since October 1 through Wednesday, while the MSCI Asia Pacific Index fell 7.5%, over the same period.
Currency moves remained mostly muted, as the Japanese yen held at 158.28 per dollar, and the offshore yuan stayed at 6.6719.
Elsewhere in the region, South Korea’s current-account surplus hit a record $61.5 billion in September, up from $46.1 billion in August, Bank of Korea data showed on Thursday. Booming semiconductor exports drove the jump, and it was the first time the monthly surplus exceeded $60 billion.
China, however, remains the weak spot as its equities have entered a bear market, wiping out more than $3 trillion in value, and the blue-chip CSI 300 has fallen into a bear market from its late-June peak. October was the market’s worst month in over a decade, and the Star 50 has plunged as much as 48%, according to Bloomberg.
Asian gains followed a strong session in New York. The S&P 500 jumped 1.6%, its biggest rise in three months, and the tech-heavy Nasdaq 100 added 0.9%. Investors, it seems, are willing to look past possible policy gridlock in Washington now that Democrats have wrested control of both chambers of Congress.
US Treasuries also rallied, as traders trimmed bets on US Federal Reserve rate hikes over the coming year, while the dollar posted its steepest decline in two months. Speculation that the so-called blue wave would restrict President Donald Trump’s ability to add to the deficit lent further support to stocks.
Democrats who oppose data centres won landslide victories, including in traditionally ‘red’ states like Texas, and investors seemed to bet that curbs on new construction would cement the big firms’ hold on scarce computing power while easing strain on their cash flows.
Amazon surged 7.4% to a three-month high, while Meta Platforms, Alphabet and Microsoft rose between 2% and 6.3%. Apple, which has steered clear of Big Tech’s heavy AI spending but has felt the pinch of an AI-driven jump in memory chip prices, leapt nearly 7% to a record high.
If those gains hold, the five companies will add more than $750 billion in combined market value.
The rally reversed days of selling driven by worries over AI costs, after quarterly results showed the AI infrastructure race turning once cash-rich, debt-light companies into heavy spenders reliant on borrowing. Microsoft was the exception, reporting $18.6 billion in cash flow.
Still, according to a Bloomberg report, many investors see little immediate threat to the AI investment theme that has powered the sector’s rally, even though Democrats could complicate data-centre projects in some states.
Oil steadied in early Asian trade on Thursday after its biggest single day drop since May. Brent crude tumbled more than 8% on Wednesday to settle near $95 a barrel, and West Texas Intermediate fell towards $88.
Traders now expect mounting pressure on Republicans to end the war with Iran and strike a deal. Senate Minority Leader Chuck Schumer pledged to bring the war to an end soon, and Vice President JD Vance wrote in a long post that voter anger over the war and the US-Israel relationship doomed his party at the polls.
With Agency Inputs
Asia markets mixed after Wall Street rally post Democrat sweep in US; Nikkei, TOPIX rise