Asia-Pacific stock markets continue their rally, aiming for the best February on record, with South Korea's stock index rising 18% this month, but tech stocks came under pressure after Nvidia's earnings report.

February 27, Asian stock markets are heading toward their best February ever. Investors are heavily buying companies in the region that provide artificial intelligence (AI) infrastructure, driving this record-breaking surge.

The MSCI Asia Pacific Index rose slightly today, with a 6.3% increase this month. This is the best February performance since the index’s inception in 1998. The index is also on track to outperform the S&P 500 for the third consecutive month. U.S. stock futures fell on Friday, indicating further declines in Wall Street’s benchmark indices.

South Korea, as a barometer for AI investment, is the standout market in Asia. The Korea Composite Stock Price Index (KOSPI) has risen about 18% this month and has surged 46% so far this year, making it the best-performing benchmark globally.

Asian stock markets have outperformed European and U.S. benchmarks as investors flock to companies supporting AI infrastructure expansion, viewing regional firms 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, dubbed “AI panic trading.”

Global asset managers overseeing over $20 trillion are increasingly bullish on emerging market stocks, currencies, domestic bonds, and credit, potentially fueling a new record-breaking rally in this sector.

Citi has reviewed outlooks from some of the world’s largest asset managers and found increased long positions in Asia, Latin America, and EMEA markets. This comes as MSCI’s major emerging markets stock index nears a record high.

• MSCI Asia Pacific Index rose slightly today by 0.15%, with a 6.3% increase this month. South Korea’s KOSPI has gained about 18% this month and 46% year-to-date.
• S&P 500 futures down 0.4%. Japan’s Topix up 0.4%. European Stoxx 50 futures little changed.
• U.S. Treasuries remain higher, 10-year yields around 4%. Australian 10-year yields fell 5 basis points to 4.65%.
• Dollar index little changed. EUR/USD steady at 1.1794. JPY/USD up 0.1% to 155.95. Offshore RMB/USD down 0.2% to 6.8575.
• Spot gold up 0.2% to $5,192.81 per ounce. Gold has risen over 6% in February, marking its seventh consecutive month of gains—the longest monthly rally since 1973.
• Bitcoin dipped slightly to $67,288.68, Ethereum fell to $2,018.49.
• WTI crude oil down 0.4% to $64.98 per barrel.

Nvidia Earnings “Failed to Dismiss AI Fears,” Tech Stocks Under Pressure

On Friday, tech stocks were the worst-hit sector in Asia. Earlier, U.S. benchmarks declined, weighed down by market sentiment reacting to Nvidia’s lackluster earnings report.

Hardika Singh of Fundstrat Global Advisors said the market’s muted reaction to Nvidia—despite revenue, net income, and guidance surpassing expectations—partly reflects that investors have become accustomed to its strong performance.

“But it failed to ease concerns about its competitive moat shrinking in the evolving computing world, nor did it clarify its game plan in the AI disruption that could upend industries 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 markets.

Jack Dorsey’s payments giant Block Inc. surged over 20% in after-hours trading after reports that the company plans to cut nearly half of its staff (about 4,000 jobs) to focus on AI. Dell Technologies’ stock also jumped significantly in extended trading, following better-than-expected outlooks for AI server sales.

Other Asset Performances: Gold Rises Consecutively, U.S. Treasury Yields Hit Yearly Lows

In other parts of the market, U.S. Treasuries maintained gains, with 10-year yields hovering around 4%, briefly touching their lowest level this year during U.S. trading hours. Earlier on Friday, Australian 10-year yields fell 5 basis points to 4.65%. The dollar showed mixed movements.

After discussions on Thursday, the U.S. and Iran agreed to hold more nuclear talks next week, stabilizing oil prices amid ongoing tensions due to U.S. military deployments in the Middle East.

Additionally, gold is on track to set the longest monthly winning streak since 1973, with February’s gains exceeding 6%, marking its seventh consecutive month of increases.

In Japan, core inflation in Tokyo slowed to its lowest level in over a year, helped by Prime Minister Fumio Kishida’s utility subsidies that eased household energy costs. The yen strengthened slightly on Friday.

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