AI Rally Sweeps Asia as Markets Hold Their Breath for the Fed Decision

Asian markets opened Wednesday, October 28, in full risk-on mode, riding renewed enthusiasm for artificial intelligence. The MSCI Asia Pacific index added 1.4%, its second straight advance, but the real story was South Korea: the Kospi surged 6.6%, powered by a 10% jump in SK Hynix after the chipmaker reported a more than sevenfold rise in quarterly operating profit and unveiled plans to return about $45 billion more to shareholders. Samsung Electronics climbed 9.5% and Japan’s Kioxia Holdings surged 16%. The rally followed a chip-led session on Wall Street, with Nasdaq 100 futures gaining a further 0.4% in Asian hours.

Tuesday’s US session set the tone. The Nasdaq Composite rose 1.18% to 26,477.81, the S&P 500 gained 0.60% to 7,722.60, and the Dow Jones Industrial Average added just 0.03% to 52,377.57, while the small-cap Russell 2000 climbed 1.16% and the VIX fear gauge cooled 4.73% to 17.52. Chip names including Broadcom, Micron and AMD each advanced 3% or more, and mining stocks soared as gold rose 0.87% to $4,073.40. The breadth of the move mattered: this was not only a mega-cap story, with small caps and miners joining the advance even as the 10-year Treasury yield stayed near 5%.

All of it now funnels into one event: the Federal Reserve’s decision later on Wednesday, due at 2 p.m. Eastern Time with Chair Kevin Warsh’s press conference half an hour later. Traders put the chance of a hold at about 91%, keeping the federal funds range at 3.75%–4.00%, with less than a 10% chance of a move this week — but a December hike is still priced at roughly 73%. The tension is familiar: September inflation ran hot at 3.7% against a 2% target, yet the Fed raised rates unanimously only last month, and JPMorgan expects at least two hawkish dissents. As one strategist put it, the Fed does not need to hike today to move markets — it only needs to shift how likely a December hike looks.

Beyond stocks, the cross-currents were striking. The dollar index held near a two-week high at 102.37, the euro was little changed around $1.1123, the yen near 157.98 per dollar, and the 10-year Treasury yield ticked up to 5.02%. Brent crude snapped a two-day losing streak, rising about 1.4% to around $115.40 a barrel after reports that Washington had told several Gulf countries to prepare for a short, intense military campaign after the US midterm elections, while gold eased 0.3% to about $4,045 an ounce. The sharpest currency move came from New Zealand, where the dollar slumped almost 2% against its Australian counterpart — its worst since 2017 — after the central bank unexpectedly left rates unchanged. Bitcoin edged up 0.5% to about $81,103.

Why this matters goes beyond a single green day. The AI trade has just survived a three-week rout, helped by Anthropic’s Nasdaq IPO filing and funding announcements from Meta, SpaceX and Broadcom — but the next test is earnings, not enthusiasm. Alphabet and Microsoft report after Wednesday’s close, Amazon follows on Thursday, and investors are asking whether huge AI capital spending turns into sustainable revenue rather than simply lifting every stock in the sector. Add Thursday’s European Central Bank decision and US GDP and PCE data, plus the Bank of Japan on Friday, and one hawkish sentence from Warsh, one soft earnings print, or one oil spike could unwind the rally fast. Our forex section explains the macro forces behind these moves, and the forex tools page has calculators for sizing risk in a volatile week like this. (Not financial advice.)