Beijing: Asian markets rose on Thursday to recover some of the previous day’s significant losses as investors tracked a recovery on Wall Street driven by jobs data that alleviated concerns about the US economy. Signs that a majority of the US Supreme Court was sceptical about the legality of President Donald Trump’s extensive tariffs also provided some support.
According to Bangladesh Sangbad Sangstha, trader sentiment improved after Wednesday’s selloff, which was prompted by concerns that the tech-fuelled AI rally characterising markets this year could lead to a bubble. The selloff, which mirrored significant losses on Wall Street, affected some regional giants, including Japanese tech investor SoftBank and South Korean chipmakers Samsung and SK hynix.
However, New York investors had a more positive experience on Wednesday after figures from payrolls firm ADP indicated a larger-than-expected jump in US private sector employment last month, following a surprising decline the previous month. A separate report suggested that activity in the crucial services industry exceeded estimates.
The jobs data release is likely to attract extra attention as it is one of the few economic indicators released in recent weeks due to the US government shutdown. Asian markets followed Wall Street’s lead, buoyed by upbeat earnings, with Tokyo and Seoul both experiencing gains, although not enough to fully recover from Wednesday’s losses. Markets in Hong Kong, Shanghai, Sydney, Singapore, Taipei, Manila, Bangkok, and Jakarta also saw increases.
Concerns remain that valuations have risen too high due to the AI frenzy, which has driven some firms to record levels. US chip titan Nvidia, for example, has topped a $5 trillion valuation. IG market analyst Fabien Yip noted that “valuation concerns have intensified” as the S and P 500 index has climbed throughout the year, and investors are questioning whether current price levels are sustainable, particularly for stocks boosted by the AI boom if interest rates stay elevated longer than expected.
Investors are closely monitoring developments in Washington, where Supreme Court justices questioned Trump’s ability to impose tariffs, which have generated billions of dollars in customs revenue. The justices are examining Trump’s use of emergency powers to impose “reciprocal” tariffs on nearly every US trade partner, as well as levies targeting Mexico, Canada, and China for their alleged roles in illicit drug flows.
Several conservative justices, along with the three liberals, questioned whether the International Emergency Economic Powers Act invoked by Trump grants the authority to impose tariffs. Chief Justice John Roberts highlighted that the statute does not mention tariffs, and imposing tariffs is akin to taxation, a “core power of Congress.” Justice Sonia Sotomayor emphasized that the power to impose taxes is a “congressional power, not a presidential power,” stating that tariffs are essentially taxes.
Lawyers noted that if the top court finds Trump’s global tariffs illegal, the government could use other laws to temporarily impose up to 15 percent duties while exploring options for more permanent levies.