ASX hits another record high amid rate cut hopes​on January 31, 2025 at 7:11 am

Overnight, the S&P 500 rose 0.5 per cent, as four out of every five stocks in the index climbed. The Dow Jones Industrial Average added 168 points, or 0.4 per cent, and the Nasdaq composite gained 0.3 per cent. The Australian sharemarket is set to climb, with futures pointing to a rise of 36 points or 0.4 per cent at the open. The ASX jumped by 0.6 per cent on Thursday.

Meta Platforms helped push indexes higher after rising 1.6 per cent. The company behind Facebook and Instagram delivered a better profit for the end of 2024 than analysts expected. Perhaps just as importantly for the market, it also talked up its artificial-intelligence efforts and said it will continue to invest in the space.

That calmed some of the worries created by a Chinese upstart, DeepSeek, when it said it developed a large language model capable of competing with the world’s best, without having to use top-flight chips. That raised questions about whether all the investment expected for AI chips, data centres and electricity is really needed and sent a shock through markets at the start of the week.

The AI boom has been a primary reason for the US stock market’s run to repeated records in recent years, and the threat has hit stocks like Nvidia particularly hard. The chip company that’s become the symbol of the AI frenzy spent most of Thursday lower, but it ended with a gain of 1 per cent and was one of the strongest forces lifting the S&P 500.

Keeping indexes in check was Microsoft, which fell 6.2 per cent. The software giant topped analysts’ expectations for profit in the latest quarter, but the focus was instead on the slower-than-expected growth in its cloud computing business, which is a centrepiece of its AI efforts.

Microsoft CEO Satya Nadella also continued to talk up AI following DeepSeek’s disruption.

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“DeepSeek had some real innovations,” he said, and it is good to have efficiency gains and lower prices in AI development because it “means people can consume more and there’ll be more apps written.”

Treasury yields held relatively steady Thursday after a report indicated the US economy grew at a solid pace at the end of 2024, but slightly slower than economists expected. The 10-year Treasury yield edged down to 4.52 per cent from 4.53 per cent late Wednesday.

In Washington, the Federal Reserve had also been cutting its main rate since September to help the US economy, but it opted to hold steady on Wednesday. Fed Chair Jerome Powell said it likely needs to see more evidence of a slowdown either in inflation or in the US job market to lower rates further.

On Wall Street, Tesla drove 2.9 per cent higher even though Elon Musk’s electric-vehicle company reported a weaker profit for the latest quarter than analysts expected. Musk asserted Tesla will offer unsupervised “full self-driving” technology to its customers as a paid service starting in Austin in June.

In stock markets abroad, indexes rose across much of Europe after Japan’s Nikkei 225 added 0.3 per cent. Several Asian remained closed for the Lunar New Year holiday.

With AP

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