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The Asian stock market rallied on Wednesday. It was helped by Wall Street's technology-driven rebound and the eased concerns regarding Chinese Artificial Intelligence firm DeepSeek. The trading was subdued because of the Lunar New Year, and investor focus shifted to the Federal Reserve's upcoming interest rate decision.

Market Performance across Asia

Gains were seen in several key Asian indices:

  • Japan's Nikkei 225 rose 1% from the previous day's loss to reach 39,414.78.

  • S&P/ASX 200 in Australia gained 0.6% at 8,447.00. Supported by the latest Consumer Price Index from Australian Bureau of Statistics which showed a minor 0.2% gain--the lowest rate since June 2019.
  • India's Sensex grew by 0.7%, but Bangkok's SET dropped 0.2%.

Meanwhile, U.S. futures remained steady, and oil prices saw a slight decline

Wall Street rebound led by tech stocks

The technology sector recovered quickly on Tuesday following a volatile start to this week due to doubts about AI investment.

  • S&P 500 rose 0.9% to 6,067.70. This is a recovery of more than half its losses from the previous session.
  • Dow Jones Industrial Average (DJIA) rose by 0.3% at 44,850.35.
  • Nasdaq Composite soared by 2% at 19,733.59 to reverse some of Monday’s decline of 3.1%.

Nvidia, an important player in AI, has seen a remarkable rebound. The company's stock rose 8.8%, after falling 17% on Monday. This is its largest drop since 2020 when the COVID-19 crash occurred. Other AI-related stocks also stabilised, with Broadcom gaining 2.6% and Constellation Energy recovering 1.4% after a sharp 21% drop the previous day. Speculation around Constellation’s role in powering AI data centers contributed to the rebound.

DeepSeek's Impact AI Investment

DeepSeek Chinese AI Company has caused a stir in the tech industry by making claims that they have developed an AI language system comparable to those used by leading U.S. AI companies. This has led to questions being raised about whether massive investment is needed in AI chips or energy infrastructure. It may reduce the demand for data centers, but it also opens up other growth sectors.

Federal Reserve Decision Looms

Investors' attention is focused now on the Federal Reserve decision on interest rates, due to be made on Wednesday. Although the Fed's rate decision is expected to remain unchanged, it would be the first Fed meeting since September in which no interest rates were cut.

Although the Fed announcement is the most important market driver this week, the impact of the U.S. consumer report was less than initially anticipated. Also, the earnings of several major U.S. corporations, including Apple Meta Platforms Microsoft and Tesla are due to be released. This could have a further impact on market sentiment.

Commodity and Currency Markets Updates

  • Oil Prices: U.S. Crude Oil prices dropped 8 cents, to $73.69 a barrel while Brent crude fell 12 cents to $76.37 a barrel.
  • Currencies: The U.S. dollar fell against the Japanese yen from 155.53 to 155.21. However, the euro increased from $1.0432 down to $1.0437.

Conclusion

While the rally on Asian markets reflects growing optimism in advance of Federal Reserve interest rate decisions, stabilizing tech stocks has been aided by easing concerns about AI investments. Investors need to stay alert and flexible as the global financial market reacts to economic data, policy decisions and other factors.

At KQ Markets, we provide expert insights and powerful trading tools to help you navigate the ever-changing market landscape. Whether you're trading indices, commodities, or forex, our platform offers the resources you need to make informed decisions.

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