Asian stocks surge as Anthropic IPO lifts sentiment ahead of earnings

Asian markets experienced a significant surge on Tuesday, driven by the much-anticipated IPO filing of AI pioneer Anthropic. The stock market rally boosted risk appetite ahead of tech earnings and central bank meetings that could influence near-term interest rates. Anthropic revealed steep losses and impressive revenue growth in its US IPO filing, which heightened investor interest in the potential profitability of massive AI spending.

Meta Platforms' plans to raise up to $95 billion in its largest-ever equity fundraising also contributed to the positive sentiment. Currency markets remained relatively stable as investors awaited policy decisions from the Federal Reserve, European Central Bank, and Bank of Japan, with most economists expecting rate hikes to be postponed.

Tech-focused South Korea's KOSPI rose over 4% in early trading, while Japan's Nikkei climbed 1.9%. MSCI's Asia-Pacific index outside Japan increased by 1.2%, and Nasdaq futures jumped 0.4% following a 2.8% surge in US chip stocks overnight. Over a third of S&P 500 companies are set to report earnings this week, with major tech players like Alphabet, Microsoft, and Amazon.com expected to deliver crucial insights into the AI trade's resilience.

Analyst Anthony Saglimbene emphasized the need for investors to see evidence that AI-driven capex spending is backed by strong business demand and sustainable profitability. Brent crude futures dipped 0.7% to $114.95 per barrel, reflecting a potential break from a six-month high due to optimism surrounding the resolution of the US-Israeli conflict with Iran, although supply concerns persisted.

Nick Twidale, chief market strategist at ATFX Global, warned that geopolitical developments could still push Brent prices back towards $120, as the Middle East war continues to impact oil supply and global inflation expectations. The ongoing conflict has driven up oil prices, intensified inflation concerns, and complicated the outlook for near-term interest rates, putting the focus on central bank decisions scheduled for the week.

Fed officials have indicated they will not raise short-term borrowing costs again this week, but market participants anticipate a pause in rate hikes will not be permanent, with a December hike widely expected. Macro and policy head at J.P. Morgan Asset Management, Geng Ngarmboonanant, expressed confidence in the US economy's ability to navigate higher interest rates, suggesting growth could remain robust.

The US 10-year Treasury yield remained steady at 4.992%, below the 5% threshold breached in September as investors flocked to safer Treasuries amid AI-related market turmoil. The Japanese yen served as a safe haven in currency markets, trading at 157.72 per dollar ahead of the Bank of Japan's upcoming meeting. The central bank is widely anticipated to declare victory in its 14-year effort to achieve its 2% inflation target while hinting at potential inflation overshooting, which could prompt an interest rate hike as early as December. In commodities, gold slipped slightly to $4,013.70 per ounce.