Asian stocks surge as Anthropic IPO lifts sentiment ahead of earnings, central banks

Asian markets experienced a surge on Tuesday, propelled by the AI giant Anthropic's anticipated IPO filing. The tech sector's upcoming earnings are expected to test the AI trade, while central bank meetings will impact near-term interest rates. Anthropic revealed steep losses and strong revenue growth in its US IPO filing, sparking investor interest in the potential payoff from massive AI spending. Meta Platforms also announced plans to raise up to $95 billion in its largest-ever equity fundraising.

Currency markets remained relatively stable ahead of policy decisions from the Federal Reserve, European Central Bank, and Bank of Japan. Economists predict all three central banks will hold interest rates steady, with the focus shifting to comments from policymakers to gauge the rates outlook.

Tech-heavy South Korea's KOSPI rose over 4% in early trading, while Japan's Nikkei increased by 1.9%. The MSCI's Asia-Pacific index outside Japan gained 1.2%. Nasdaq futures climbed 0.4% after US chip stocks surged 2.8% overnight, marking its biggest one-day increase in a month. European stock futures slipped by 0.23%.

Over a third of S&P 500 companies are slated to report earnings this week, including tech giants Alphabet, Microsoft, and Amazon.com. Anthony Saglimbene, Ameriprise's chief market strategist, emphasized that investors need evidence that demand for AI infrastructure extends beyond interconnected relationships, ensuring that aggressive capex spending reflects genuine business needs and profitability remains stable as new infrastructure is deployed.

Brent crude futures slipped 0.7% to $114.95 a barrel, moving away from a six-month high as investors weighed the potential resolution of the US-Israeli war with Iran, keeping supply concerns at bay. However, sentiment remained fragile. Nick Twidale, chief market strategist at ATFX Global, cautioned that supply remains the primary concern, and any developments threatening physical exports could cause Brent to retest recent highs and potentially push towards $120.

The ongoing eight-month conflict has impacted oil prices, contributing to inflation worries and influencing the global interest rates outlook, intensifying the focus on central bank decisions this week. Fed policymakers have indicated they will not raise short-term borrowing costs again this week, but investors anticipate a rate hike pause to be temporary, with a potential increase in December.

Geng Ngarmboonanant, head of macro and policy at J.P. Morgan Asset Management, believes the US economy can manage through higher interest rates.

The US 10-year Treasury note yield remained steady at 4.992%, below the critical 5% level breached in September as investors sought safety in Treasuries amid AI-related stock market turmoil. The Japanese yen emerged as a favored currency, trading at 157.72 per dollar ahead of the Bank of Japan's decision on Friday. The BOJ is expected to announce success in its 14-year quest to achieve its 2% inflation target, signaling a potential interest rate hike as early as December. In commodities, gold dipped slightly and settled at $4,013.70 per ounce.