GLOBAL MARKETS: Stocks rally as CoreWeave eases concerns, bond yields rise on rate fears

Stocks in Asia rallied on Wednesday as CoreWeave results waved away AI bubble fears, while global bond yields jumped and the dollar held firm after a hot US inflation print raised the risk of a half-point rate hike next month.

European bourses were set for a stronger open, with pan-region stock futures STXEc1 up 0.7%. Nasdaq futures NQc1 gained 1.4%, while S&P 500 futures ESc1 rose 0.6% thanks to an 8% after-hours jump in CoreWeave CRWV.O, the firm at the centre of the AI bubble fears.

The AI infrastructure company, backed by Nvidia NVDA.O, said it would be profitable in the first half of 2028, as third-quarter revenue soared.

That helped lift sentiment across Asia. MSCI's broadest index of Asia-Pacific shares .MIAP00000PUS jumped 1.9% for a third straight day of gains, helped by a 2.6% rise in South Korea and a 3% increase in Taiwan. Japan's Nikkei .N225 climbed 1.5%.

"CoreWeave's results came out post-market... people were holding their breath hoping for a good result. I think they were relatively well rewarded," said Jamie Hannah, deputy head of investments at VanEck.

"Down the line, higher borrowing costs are obviously an issue for companies... However, there's lots of news at the moment. We've just had the midterm elections. We have the upcoming launch of the IPO of Anthropic. It's grabbing a lot of headlines."

Shares of Nvidia also steadied after two days of steep losses that wiped $430 billion off its market value. Its CEO Jensen Huang is under investigation over reports he may have been the target of a foreign intelligence operation linked to an alleged Chinese spy.

Anthropic is pressing ahead with its listing at a $1.4 trillion valuation, setting up a key test of Wall Street's faith in the AI boom it helped ignite.

Shares of SoftBank Group 9984.T recouped earlier losses to be flat on the day after it took a net loss of $7 billion in the second quarter, hit hard by hefty buildout costs for US data centres.

50-BP HIKE IN PLAY

Data showed overnight core US inflation ran at a monthly rate of 0.3% in October, higher than the forecast 0.2%. Before the data landed, Fed Governor Christopher Waller said a core reading of 0.3% would prompt him to consider a 50-basis-point hike at the next meeting in December.

Dallas Fed President Lorie Logan said two more rate rises were needed, possibly rapidly, and Chicago Fed President Austan Goolsbee warned of a "real inflation issue" on hand, while Philadelphia Fed President Anna Paulson called for gradual rate hikes.

The chorus of hawkish rhetoric sent Fed funds futures tumbling, with a quarter-point move in December now essentially locked in and a 10% risk of a 50 bp rise. A total of three quarter-point moves are fully priced in by the middle of next year. 0#USDIRPR

Two-year Treasury yields US2YT=RR surged 18 basis points overnight. Bonds in Asia were sold off, with Japan's 10-year government bond yield up 11 bps to 2.795%, and Australia's up 6 bps to 5.05%.

Treasury futures were steady in Asia ahead of a US holiday.

"This Fed is finally doing what every other Fed would have done in this situation, which is hike and hike quickly," said Andrew Lilley, chief rates strategist at Barrenjoey.

"I'd say you're going to have at least four or five people who want to do that (50bp hike)... you cannot rule it out."

The repricing in interest rate expectations lifted the dollar, which gained 0.5% overnight against its major peers =USD. It edged up another 0.1% on Wednesday to 102.29.

The risk-sensitive Australian dollar AUD=D3 was the biggest casualty in the currency markets, having dived nearly 0.9% overnight as traders wagered its central bank is done tightening after five rate rises this year with rate cuts expected next year.

A stronger US dollar hit gold hard, with the precious metal XAU= down 2.6% overnight before edging up 0.8% on Wednesday to $4,061.56 an ounce.

Oil prices rebounded on Wednesday after two days of losses that were driven by hopes that the Iran war would be resolved soon after the Democrats' victory at the US midterm elections. Brent crude futures LCOc1 rose 0.8% to $92.26 a barrel, having dropped to as low as $89.16 overnight.

-Editing by Shri Navaratnam and Muralikumar Anantharaman/Reuters