Global stocks rallied on Friday as robust results from Amazon and Microsoft reassured bruised investors to return to AI trade, while currency traders stayed alert to intervention a day after Japanese authorities likely stepped in to prop up the yen.
An abrupt strengthening in the Japanese currency earlier in the session faded, with the dollar last up 0.35 per cent at 160.09 yen, after the Bank of Japan held interest rates steady.
"The yen fundamentals and technicals are very poor. Intervention is not a credible, long-term solution," said Lauren van Biljon, senior portfolio manager, rates and FX, at Allspring Global Investments.
Meanwhile, investor worries that the AI rally may soon run out of steam eased after Microsoft's earnings on Wednesday, where it forecast generating cash throughout fiscal 2027.
Amazon followed a day later with its strongest cloud growth in more than four years, calming investors eager for signs that the billions being poured into AI buildout are bearing fruit.
In Europe, the STOXX 600 index hit a record high and was poised for its fourth consecutive month of gains.
Futures tracking the tech-heavy Nasdaq 100 index rose 1.05 per cent, while S&P 500 and Dow futures rose 0.32 per cent and 0.45 per cent, respectively.
South Korea's battered KOSPI leapt 17.91 per cent, mounting a record comeback after heavy losses earlier this week. The tech-heavy bourse, still about 30 per cent off its all-time high, has become emblematic of the sharp swings in investor sentiment towards AI-related stocks.
"Investors are increasingly focused on capital efficiency, financing and the long-term economics of hyperscalers' AI spending rather than on near-term demand," said Saverio Papagno, portfolio manager of North Square Growth Opportunities ETF.
While worries about competition from China and AI hyperscalers' debt reliance swirl, selloffs could be a buying opportunity for long-term investors as "the sector will resume its leadership" once there is greater clarity, he said.
The MSCI All Country World Price index gained 0.81 per cent and was on track to snap a two-week losing streak. It will still end the month with losses of 0.40 per cent should current levels hold. The yen had gained on Thursday, when Japan conducted yen-buying, dollar-selling intervention, a market source said.
But such efforts have had limited success in reversing the weakness in the currency, and analysts say the outlook may not improve unless the central bank raises rates.
The BOJ kept interest rates unchanged on Friday, but signalled its resolve to push up borrowing costs. - AFP
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