Markets jumped as tech embraces the buzz around AI, but inflation is still a concern

Overnight session saw a rise in most Asian equities as local technology companies shot up in response to fresh hopes for artificial intelligence. However, investors' attention was still focused on several impending inflation data in hopes of finding further signs of interest rate reduction this year.

After largely declining over the previous five days as investors questioned expectations for an early interest rate decrease by the Federal Reserve, regional markets recovered from a challenging start to 2024.

More hints on the subject should be provided by U.S. inflation data that is anticipated later this week.

Positive indications were provided by regional inflation figures. After a long weekend, Japan's Nikkei 225 index shot up 1.4% as statistics revealed that Tokyo's inflation, which serves as a national barometer, dropped as predicted in December and was now very close to the Bank of Japan's annual 2% objective.

A terrible earthquake in central Japan damaged some people's perceptions of the nation, but it also caused some to wager that the BOJ will have to postpone plans to abandon its ultra-dovish policies in order to support reconstruction efforts.

The excitement surrounding AI resurfaced on Monday as chipmaker NVIDIA, which is leading an AI-driven rise in 2023, jumped over 6% to all-time highs after the company was identified as one of New Street Research's top selections for 2024. Asian stocks saw a positive effect from those gains.

In addition to a strong dose of bargain shopping, gains in tech stocks were also fueled by the industry's beating in the first week of 2024 due to mounting uncertainties about an early rate drop by the Fed. These uncertainties persisted ahead of this Thursday's release of the U.S. Consumer Price Index (CPI), which is anticipated to reveal a slight uptick in inflation in December.

(Sources: investing.com, reuters.com)