The Asia-Pacific stock market continues its upward trend, sprinting towards the best February in history, with the South Korean stock index rising 18% for the month, but technology stocks are under pressure following NVIDIA's earnings report

On February 27, Asian stock markets are on track for their best February performance ever. Investors are heavily buying companies in the region that provide artificial intelligence (AI) infrastructure, driving this record increase.

The MSCI Asia-Pacific Index, despite a slight rise today, has accumulated a 6.3% increase this month. This is the best February performance for the index since its inception in 1998. The index is also expected to outperform the S&P 500 for the third consecutive month. U.S. stock index futures fell on Friday, indicating that Wall Street's benchmark indices will decline further.

As a bellwether for AI investment, South Korea is the standout market in Asia. The Korea Composite Stock Price Index (Kospi) has risen about 18% this month and surged 46% year-to-date, making it the best-performing benchmark index globally.

Asian stock markets have outperformed European and U.S. benchmark indices as investors flock to companies supporting AI infrastructure expansion, viewing businesses in the region as "shovel sellers" in the supply chain. In contrast, the disruptive potential of this new technology has been unsettling stocks across various U.S. industries for weeks, a phenomenon referred to as "AI panic trading."

Global asset management firms managing over $20 trillion in assets are increasingly bullish on emerging market stocks, currencies, domestic bonds, and credit, which could provide new momentum for the sector's record-breaking rally.

Citigroup Inc. reviewed outlooks from some of the world's largest asset management firms and found that funds have increased their long positions in Asia, Latin America, and the Europe, Middle East, and Africa markets. This finding comes as MSCI's main emerging market stock index approaches historical highs.

• The MSCI Asia-Pacific Index rose 0.15% today, with a cumulative increase of 6.3% this month. The Korea Composite Stock Price Index (Kospi) has risen about 18% this month and surged 46% year-to-date.
• S&P 500 futures fell 0.4%. The Japan Exchange Index rose 0.4%. The Euro Stoxx 50 futures were little changed.
• U.S. Treasuries maintained their gains, with the 10-year Treasury yield hovering around 4%. The yield on Australia's 10-year Treasury fell 5 basis points to 4.65%.
• The U.S. Dollar Index was little changed. The euro to U.S. dollar exchange rate was basically flat at $1.1794. The Japanese yen rose 0.1% against the U.S. dollar to 155.95. The offshore renminbi fell 0.2% to 6.8575 against the U.S. dollar.
• Spot gold rose 0.2% to $5,192.81 per ounce. Gold has increased over 6% in February and is set to record its seventh consecutive month of gains, marking the longest monthly winning streak since 1973.
• Bitcoin dipped slightly to $67,288.68, while Ethereum fell to $2,018.49.
• WTI crude oil fell 0.4% to $64.98 per barrel.

NVIDIA's earnings report "failed to dispel AI concerns," putting pressure on tech stocks

On Friday, technology stocks became the biggest decliners in the Asian market. This followed a decline in Wall Street's benchmark indices, with market sentiment weighed down by a tepid reaction to NVIDIA's earnings report Hardika Singh from Fundstrat Global Advisors stated that the market's calm reaction to NVIDIA (despite its revenue, net profit, and guidance exceeding expectations) is partly because investors have now become accustomed to such outstanding performance.

"However, it failed to alleviate investors' concerns about its shrinking moat in an ever-evolving computing world, nor did it explain its game plan in the AI disruption that could upend various businesses from cybersecurity to food delivery to banking," she said.

AI news continues to dominate after-hours trading

Meanwhile, even after the New York close, AI-related news continues to impact the market.

Jack Dorsey's payment giant Block Inc. soared over 20% in after-hours trading after reports emerged that the company would cut nearly half of its workforce (about 4,000 positions) to pivot towards AI. Dell Technologies' stock also surged in extended trading after the company provided a better-than-expected outlook for AI server sales.

Other asset performances: Gold rises, US Treasury yields hit year-low

In other corners of the market, U.S. Treasuries maintained gains, with the 10-year Treasury yield hovering around 4%. During U.S. trading hours, it briefly touched its lowest point of the year. Earlier on Friday, Australia's 10-year Treasury yield fell 5 basis points to 4.65%. The dollar showed mixed movements.

After a round of discussions on Thursday, the U.S. and Iran agreed to hold more nuclear talks next week, stabilizing oil prices. The market remains tense due to the U.S. military's significant deployment in the Middle East.

Additionally, gold is on track to achieve its longest monthly winning streak since 1973, with a rise of over 6% in February marking the seventh consecutive month of gains.

In Japan, Tokyo's core inflation gauge has slowed to its lowest level in over a year, as Prime Minister Fumio Kishida's utility subsidies have suppressed household energy costs. The yen strengthened slightly on Friday.