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By Kevin Buckland
TOKYO (Reuters) -Japan's Nikkei share average topped its all-time peak on Thursday, after unexpectedly strong revenue forecasts from U.S. chip designer Nvidia (NASDAQ:NVDA) lifted Asian tech stocks.
Chinese equities recovered from early weakness and looked set to extend a winning run to an eighth straight session amid optimism over Beijing's stimulus efforts.
Long-term U.S. bond yields hugged three-month highs while the dollar sagged after minutes from the last Federal Open Market Committee meeting confirmed the view that interest rate cuts would be slow in coming, but weren't markedly more hawkish than the Fed's previously expressed views.
The Nikkei 225 share average closed 2.19% higher at 39,098.68, and earlier rose as high as 39,156.97, topping the previous all-time closing and intraday highs set on Dec. 29, 1989, at the peak of the so-called bubble economy.
"Given robust corporate earnings without frothy valuations reminiscent of the last time Japanese equities were this high, a weakening yen backdrop, along with the market responding well to the government's tilt towards greater corporate governance, it's little surprise that investor sentiment remains very positive and Japanese equities continue to surge," said Joe Lin, executive director for investments at Golden Equator Wealth.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.56%, helped by gains of around 1% for both Taiwan's stock benchmark and Hong Kong's Hang Seng, which rebounded sharply after early losses.
Mainland blue chips were last up 0.61%, after oscillating during the session between small gains and losses in early trading.
U.S. stock index futures signalled solid gains, following a mixed session on Wednesday for the main benchmarks. S&P 500 futures rallied 0.75% and tech-focused Nasdaq futures jumped 1.46%.
Following the closing bell overnight, Nvidia forecast a roughly 233% surge in quarterly revenue, sending its shares up some 10% after-hours.
"U.S. futures are up, strong - that's just Nvidia, right there," said Kyle Rodda, senior markets analyst at Capital.com.
"Equities more broadly are following in the slip stream."
The Nikkei has jumped nearly 17% already this year, with the S&P 500 and Nasdaq rallying some 5% each, driven in large part by mammoth expectations for artificial intelligence (AI), with Nvidia's chips at the centre of that boom.
"Nvidia's earnings beat boosted sentiment and eased concerns over stretched valuations, providing room for the AI theme to continue to drive markets," Saxo Markets analysts wrote in a research note.
The 10-year U.S. Treasury yield eased slightly in Asian time on Thursday to 4.3069%, but remained close to the 4.332% level marked a week ago, which had not been seen since the end of November.
The bulk of policymakers at the U.S. Federal Reserve's last meeting in January were concerned about the risks of cutting interest rates too soon, with broad uncertainty about how long borrowing costs should remain at their current level, minutes released on Wednesday showed.
That reinforced the view among traders that any rate cut is not imminent, with market pricing suggesting one-in-three odds for a first reduction in May, according to CME Group's (NASDAQ:CME) FedWatch Tool.
The dollar continued to retreat from a three-month high reached last week, when the U.S. dollar index, which tracks the currency against six major peers, reached 104.97. It was down 0.12% at 103.86 in Asian trading on Thursday.
The euro ticked up 0.14% to $1.08345, and sterling added 0.08% to $1.2647, whereas the yen was flat at 150.275 per dollar.
Elsewhere, oil prices rose, adding to gains from the previous session that came amid signs of tighter supply. [O/R]
U.S. West Texas Intermediate crude futures (WTI) gained 25 cents to $78.16 a barrel, while Brent added 24 cents to $83.27 a barrel.
Oil prices rose 1% on Wednesday, with refinery restarts in the United States supporting demand after a series of outages earlier cut U.S. refinery utilisation rates to the lowest level in two years.
Japan's Nikkei hits record high as Nvidia lifts Asian tech
