Asian stocks bounce as AI, Mideast jitters recede; dollar firm on Fed bets

By Jiaxing Li

HONG KONG, Nov 9 (Reuters) - Asian markets and US equity futures had an upbeat start on Monday, edging into positive territory after a wild week when tech-heavy markets in Asia suffered some of their steepest falls in years over AI.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 2% after sliding 4.6% last week. Japan's Nikkei index added 3.5%, while Korean shares climbed 1.8%.

Taiwan's benchmark rose more than 6% after notching up its steepest weekly drop in two decades last week, when fears about AI profitability and infrastructure demand sparked a rout following wins by Democrats at the US midterm elections.

US stock futures, the S&P 500 e-minis, were 0.6% higher on Monday. On Friday, Wall Street equities rallied to end a chaotic week after heavy AI-related selling, helping to calm some nerves.

Global stocks had already been under pressure in recent weeks with the AI trade crumbling amid rising interest rates, and the US midterm results deepened worries about increased regulation of AI and data centres. But analysts say some dip-buyers might be emerging in a week relatively light on data and events.

"The only fundamental this week that matters is price," said Chris Weston, head of research at brokerage Pepperstone in Melbourne.

"You could easily see a lot of people going, 'You know what, now's the time to buy — blood on the streets. It's not as bad as everyone thinks,'" he said. "It will be driven by flow, and fundamentals will mean very little."

Earnings reports due this week from tech companies including CoreWeave, Applied Materials and Cisco Systems are set to put the profitability of AI ambitions to the test amid the massive costs of the build-out.

Meanwhile, a company-led investigation by industry bellwether Nvidia into whether its CEO Jensen Huang had been the target of a foreign spying effort could also stoke volatility, analysts said.

Nvidia shares fell about 3.5% in after-hours trading on the Blue Ocean alternative trading system, while perpetual futures declined roughly 3%, according to Hyperliquid pricing.

Brent crude fell to $98.2 per barrel after US President Donald Trump said on Sunday he was highly unlikely to order fresh attacks on Iran as long as talks to end the conflict progress.

Elsewhere, China's factory-gate inflation accelerated to its fastest pace in more than four years while consumer inflation cooled in October, reflecting persistent cost pressures from higher oil prices despite weak domestic demand.

FED HIKE BETS BUILD

A blowout jobs report on Friday showed US employers added 165,000 jobs last month, more than twice economists' expectations and bolstering the case for the US Federal Reserve to raise interest rates in December. Markets will be watching a US CPI reading due on Tuesday for further clues on inflationary pressures.

Market expectations that the Fed will increase rates at least 25 basis points at its December meeting moved up to nearly 80% following the jobs report, according to the CME FedWatch Tool.

Comments from officials also supported expectations for a rate hike, with New York Fed President John Williams saying US economic growth has remained remarkably resilient in the face of successive shocks but inflation is too high and it is essential to bring it back to 2%.

That helped the dollar notch up its biggest single-day gain in five months. The dollar index, which tracks the greenback against a basket of currencies of other major trading partners, last traded at 102.2.

The European single currency was little changed at $1.1148. The yen was 0.2% stronger at 158.215 per dollar.

In cryptocurrencies, Bitcoin added more than 1% to $74,934 while ether was steady at $2,140, crawling back from their lowest levels in over two months as investors fretted that a Democratic-controlled US Congress would toughen regulation on digital assets.

(Reporting by Jiaxing Li; Editing by DJ Yap)