Asian stocks head for fourth weekly gain on tech

Regional shares were mixed Friday with losses in Japan, and gains in AI posterchild South Korea

• Asian stocks set for longest weekly winning streak since May
• MSCI Asia Pacific Index up over 7% in four weeks, led by tech and AI bets
• TSMC earnings boost global chip stocks, reviving tech sector confidence

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Asian stocks are set for their longest weekly winning streak since May, with a regional gauge of technology shares climbing to a record as investors step up bets on artificial intelligence.

The MSCI Asia Pacific Index is poised for a fourth week of gains, during which time it had risen more than 7%. Regional shares were mixed Friday with losses in Japan, and gains in AI posterchild South Korea. That came after US equities recovered from their first back-to-back losses of the year, reviving confidence in the tech sector.

US and European equities got a boost Thursday, with a gauge of chipmakers climbing to a record after earnings from Taiwan Semiconductor Manufacturing Co. bolstered sentiment. The tech bellwether jumped 4.4% to a record close in US trading, lifting shares of Nvidia Corp. and ASML Holding NV.

Treasuries were little changed in Asia after falling in US trading when jobless claims unexpectedly dropped to the lowest since November. Oil steadied after comments from Donald Trump suggesting he may hold off on attacking Iran triggered a selloff. Gold and silver edged lower early Friday.

US stocks rebounded as the blowout outlook from TSMC renewed confidence in the durability of a key bull-market driver even as small caps climbed on signs of economic strength. The earnings also helped allay concerns over the sustainability of data-center spending amid a rotation out of richly priced technology shares.

“Technology stocks had looked vulnerable in recent weeks as investors rotated away from megacap names and into more cyclical areas of the market,” said Fawad Razaqzada at Forex.com. “TSMC’s update, though, appears to have stabilized that ‘rotation’ rather than reversed it outright.”

A run of stronger-than-expected economic data has helped shape a growing sense that conditions are improving, with investors chasing riskier parts of the market that typically benefit in that scenario.

Traders will also be watching the rising tensions in the Middle East after Fox News reported that at least one US aircraft carrier is moving to the region. US military planners are preparing a range of options depending on the actions of the Iranian government in the next few days, Fox reported.

Separately, the US and Taiwan agreed to a long-sought trade pact that would lower tariffs on goods from the self-governed island to 15% and see Taiwanese semiconductor companies increase financing for American operations by $500 billion.

In Asia, focus is also on Japan, where central bank officials are closely watching the yen’s potential influence on inflation, with possible implications for future rate hikes after a likely “hold” decision next week.

Traders are also parsing capital flows in and out of Japan Friday as the yen inches toward the 160-per-dollar mark. Official intervention to strengthen the currency is a topic of discussion among market participants as the yen trades near a one-and-a-half year low.

“We have obviously previously seen Japan intervene above the 160 level and as we get closer to that, I think that becomes a possibility,” said Divya Devesh, co-head of FX research for Asean and South Asia at Standard Chartered. “It is an unstable equilibrium,” he said of Japan’s macro backdrop.

Meanwhile, several Federal Reserve officials speaking Thursday signaled a willingness to pause rate cuts at their upcoming policy meeting, citing a labor market that appears to be stabilizing and ongoing inflation pressures.

Corporate earnings and the theme of rotating out of technology stocks also remain in focus.

“Investors seem to be a lot more confident that chip stocks can continue to grow their profits, while they’re not so sure that the buyers of all of these chips — the hyperscalers — will see the same kind of profit growth,” according to Matt Maley at Miller Tabak.