AI becomes the weather
Asia opened the week with a quiet hum of optimism — not the euphoric kind, but the steady, data-driven conviction that the AI tide isn’t just lifting megacaps anymore; it’s reshaping global market gravity. Across desks from Hong Kong to Singapore, traders came in to find screens glowing green again — the MSCI Asia ex-Japan index nudging higher, now orbiting a four-and-a-half-year high. You can almost feel the déjà vu of 2017 creeping in, that strange mix of disbelief and inevitability that marks every great liquidity wave.
Japan’s markets were shut, Treasuries dormant — so liquidity was thin — but the message in the price action was clear: AI has become the new oil, and its flow is dictating the rhythm of global equities. Last week’s tech earnings were a masterclass in corporate choreography: massive capex justified by even bigger dreams of productivity. Traders are no longer debating if AI changes the earnings curve; they’re arguing how steep that curve can go before gravity reasserts itself.
Meanwhile, the U.S. dollar sits like a stubborn high-pressure system engulfing all of Asia at a three-month peak, refusing to budge despite the Fed’s recent rate cut. It’s not that the market doesn’t believe in easing — it just doesn’t believe in the Fed’s conviction. The hawkish chorus from regional Fed presidents on Friday reminded everyone that monetary policy isn’t a one-way trade, and Powell’s line that December’s cut is “not a foregone conclusion” hit like a slight tremor through G-10 FX. Traders now price just a two-thirds chance of another trim — down from near certainty a week ago. For a market that thrives on probabilistic comfort, that’s a rude awakening. The euro languishes near $1.15, sterling leaks lower, and the yen drifts in the mid-154s — a whisper away from intervention chatter territory.
With Washington still gridlocked under the second-longest government shutdown in U.S. history, macro data is drying up. No JOLTS, no payrolls — just the eerie silence of missing catalysts. That leaves traders staring at the ISM and ADP prints like desert travelers scanning the horizon for water. Labor is the next battlefield, and Waller’s call for further easing is the only dovish note still echoing through an otherwise hawkish canyon.
Gold, the high priest of uncertainty, slipped again toward $3,980 as traders cashed in safe-haven profits. The move wasn’t about exhaustion — gold had only just begun regaining a head of steam after October’s price-agnostic central-bank bid sent it to record highs. This latest drift lower was more a function of recalibration than reversal, with China’s change in tax treatment trimming local speculative appetite on the margins. The underlying bid from official buyers remains firmly in place, but for now, momentum has cooled as traders reset ahead of the next policy cue.
Oil, meanwhile, traded with its own brand of irony — a textbook sell the rumor, buy the news move that followed the OPEC+ meeting. The cartel delivered the expected cut, but under the headlines their forward guidance leaned slightly hawkish. The pledge to “maintain market stability” sounded benign on the surface, but between the lines it read as a signal they may pause before adding barrels back. It was enough to steady sentiment and lift Brent above $65, even as positioning stayed cautious — nobody wants to fade a producer bloc that’s finally speaking with conviction again.
Even in Asia, though, the spotlight remains fixed on the earnings conveyor belt. After a season of mixed megacap results — part euphoria, part fatigue — investors are circling the next batch of AI-linked reports: AMD, Qualcomm, Palantir. The question is no longer who’s building? but who’s monetizing? Markets want proof that the trillion-dollar build-out is yielding cash flow, not just silicon and hype.
So Asia wakes this Monday to a familiar paradox: a world uneasy about U.S. politics, cautious on Fed timing, yet fully bought into the idea that AI spending will keep the lights on. You could call it optimism — or just the market’s refusal to fade what works. Either way, the tape keeps rising, and for now, that’s the only signal traders are willing to trust.
