Asian stocks advanced on Wednesday as strong quarterly results from CoreWeave revived investor confidence in artificial intelligence infrastructure spending, while hotter-than-expected US inflation pushed bond yields higher and strengthened expectations of an aggressive Federal Reserve response.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.9%, extending its gains to a third consecutive session. South Korea’s Kospi climbed 2.6%, Taiwan’s benchmark gained 3%, while Japan’s Nikkei advanced 1.5%.
The recovery followed an 8% jump in CoreWeave shares after the US market closed on Tuesday. The AI infrastructure provider, backed by Nvidia, reported a sharp increase in third-quarter revenue and said it expected to become profitable in the first half of 2028.
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The results helped ease concerns about the financial sustainability of the massive investments being made in AI computing infrastructure, which have come under pressure as investors question whether revenue growth will justify the cost of building data centers and acquiring advanced chips.
European markets were also positioned for gains, with pan-European stock futures rising 0.7%. Nasdaq futures advanced 1.4%, while S&P 500 futures gained 0.6%, supported by the after-hours rally in CoreWeave.
“CoreWeave’s results came out post-market… people were holding their breath hoping for a good result. I think they were relatively well rewarded,” said Jamie Hannah, deputy head of investments at VanEck.
He noted that higher borrowing costs could become a problem for companies further down the line, while pointing to other developments attracting investor attention, including the US midterm elections and Anthropic’s upcoming IPO.
CoreWeave’s performance offered a measure of reassurance to investors after a period of sharp selling in technology stocks linked to concerns about AI valuations, financing requirements, and the returns from data-center expansion.
The company’s profitability forecast is considered relevant because AI infrastructure providers face substantial upfront expenditure on computing equipment and facilities. Their ability to convert growing demand for AI capacity into sustainable earnings has become a key question for investors.
The recovery also helped stabilize Nvidia shares following two sessions of steep losses that erased approximately $430 billion from the chipmaker’s market value.
Nvidia CEO Jensen Huang remains under scrutiny following reports that he may have been targeted by a foreign intelligence operation linked to an alleged Chinese spy. The reported investigation has added another source of uncertainty around the company, although Nvidia shares steadied during Wednesday’s Asian trading session.
Elsewhere, SoftBank Group shares recovered earlier losses to trade broadly flat. The Japanese investment company reported a net loss of $7 billion in its second quarter, as substantial spending on US data-center infrastructure weighed on its results.
Anthropic’s planned stock market debut is also drawing attention. The Claude developer is pressing ahead with an IPO targeting a valuation of up to $1.4 trillion, setting up a major test of investor appetite for AI companies after the recent volatility in technology shares.
The contrast between CoreWeave’s earnings and SoftBank’s losses illustrates the different financial pressures across the AI investment chain. Demand for computing capacity is generating revenue growth for infrastructure providers, but the cost of securing chips, building facilities and financing expansion continues to weigh on investors and technology companies.
Hot US Inflation Puts 50-Basis-Point Fed Hike Back In Focus
While technology shares recovered, bond markets came under pressure after US data showed core inflation increased by 0.3% month-on-month in October, above economists’ forecast of 0.2%.
The reading strengthened expectations that the Federal Reserve could maintain an aggressive approach to monetary policy, with a 50-basis-point increase at its December meeting back in consideration.
Before the inflation figures were released, Fed Governor Christopher Waller had said a 0.3% core reading would prompt him to consider a half-percentage-point increase.
Other policymakers also delivered hawkish messages. Dallas Fed President Lorie Logan said two additional rate increases were needed, potentially at a rapid pace. Chicago Fed President Austan Goolsbee warned of a “real inflation issue”, while Philadelphia Fed President Anna Paulson called for gradual increases.
The comments and inflation data drove a sharp repricing in interest-rate expectations. Fed funds futures showed a quarter-point increase in December was effectively priced in, alongside a 10% probability of a 50-basis-point move. Markets had also fully priced in three quarter-point increases by the middle of next year.
US two-year Treasury yields surged 18 basis points overnight. Selling pressure spread across Asian government bonds, pushing Japan’s 10-year yield up 11 basis points to 2.795% and Australia’s equivalent yield up six basis points to 5.05%.
Treasury futures were little changed in Asian trading ahead of a US holiday.
“This Fed is finally doing what every other Fed would have done in this situation, which is hike and hike quickly,” said Andrew Lilley, chief rates strategist at Barrenjoey.
“I’d say you’re going to have at least four or five people who want to do that (50bp hike)… you cannot rule it out.”
The shift in rate expectations supported the US dollar, which gained 0.5% against major currencies overnight before adding another 0.1% on Wednesday to 102.29.
The Australian dollar was among the weakest major currencies, falling nearly 0.9% overnight as investors bet that the Reserve Bank of Australia had completed its tightening cycle following five rate increases this year. Traders are increasingly positioning for rate cuts next year.
Gold also came under pressure as higher US yields and a stronger dollar reduced its appeal. The metal fell 2.6% overnight before recovering 0.8% to $4,061.56 an ounce on Wednesday.
Oil prices moved in the opposite direction, recovering after two sessions of losses driven by expectations that the Iran war could move towards a resolution following the Democrats’ victory in the US midterm elections. Brent crude futures rose 0.8% to $92.26 a barrel, after falling as low as $89.16 overnight.
The divergent market moves point to two competing forces shaping investor positioning – renewed confidence in AI-related earnings and growing concern that persistent US inflation could keep borrowing costs higher for longer.