Chinese technology shares led gains in Asian markets on Friday, fueled by Alibaba Group Holding Ltd.’s impressive earnings report, which revealed its fastest pace of revenue growth in over a year. The surge in Alibaba’s stock, which jumped as much as 11%, has reignited optimism toward China’s tech sector, even as geopolitical tensions and a widening tariff war loom over global markets. Meanwhile, the yen weakened past 150 per dollar, adding another layer of complexity to the region’s financial landscape.
Alibaba’s Earnings Boost Asian Stocks
Alibaba’s strong performance has been a significant driver of the rally in Chinese equities, with the company’s revenue growth exceeding market expectations. The e-commerce giant’s focus on artificial intelligence (AI) has also captured investor attention. CEO Eddie Wu announced that the pursuit of artificial general intelligence (AGI) is now the company’s “primary objective,” signaling a strategic shift toward cutting-edge AI development.
Morgan Stanley’s chief China equity strategist, Laura Wang, noted that Alibaba’s earnings and capital expenditure plans have “surprised the market significantly.” She emphasized that China’s role in the global AI race should be reassessed and appreciated by investors. This sentiment has contributed to a $1.3 trillion rally in Chinese stocks, driven by global funds pouring into the sector.
Yen Weakens Amid BOJ Rate Hike Speculation
The yen’s weakening past 150 per dollar on Friday followed a brief period of strength, as traders speculated about the Bank of Japan’s (BOJ) potential interest rate hike. Data showing Japanese inflation accelerating more than expected in January has further fueled these expectations. Consumer prices, excluding fresh food, rose 3.2% year-over-year, the largest gain since June 2023.
Carol Kong, a strategist at Commonwealth Bank of Australia, noted that the inflation data, alongside recent GDP and wage figures, justified the increased likelihood of a BOJ rate hike. Traders are now pricing in an 84% chance of a 25 basis point hike at the July meeting, up from 70% at the start of the month.
Global Markets React to Mixed Signals
While Chinese tech stocks surged, other markets showed mixed performance. Japan’s Topix index was flat, and Australia’s S&P/ASX 200 fell 0.4%. In the U.S., the S&P 500 slipped 0.4% on Thursday, weighed down by declines in Walmart shares and a slide in banking stocks.
In commodities, oil is on track for its biggest weekly gain since early January, driven by supply uncertainties. Gold, meanwhile, held near record levels, poised for an eighth straight weekly advance as investors seek safe havens amid geopolitical and trade tensions.
Key Events to Watch
Investors are closely monitoring several key events this week, including:
- Eurozone HCOB manufacturing and services PMI data
- U.S. S&P Global manufacturing and services PMI, existing home sales, and consumer sentiment figures
These data points will provide further insights into the health of the global economy and potential market-moving trends.
The Bigger Picture for Chinese Tech and Global Markets
Alibaba’s resurgence and the broader rally in Chinese tech stocks highlight the sector’s resilience and potential for growth, even as challenges persist. However, as Lazard Asset Management’s Ron Temple cautioned, “until China makes major structural reforms, those growth spurts are gonna be short-lived.”
For now, the surge in Chinese equities and the yen’s fluctuations underscore the dynamic nature of global markets, where optimism and uncertainty often coexist. As investors await further developments, the focus remains on how companies like Alibaba and central banks like the BOJ will navigate the evolving economic landscape.
