Berliner Boersenzeitung - Markets waver after Wall St drop, Alibaba soars

Chinese tech firms stood out, with Alibaba rocketing after its chief executive said the e-commerce giant planned to ramp up spending on artificial intelligence.

Investors have enjoyed a months-long rally that has pushed some markets to record highs, but the run-up took a pause Tuesday amid talk that the gains may have gone too far.

All three main indexes in New York were dragged down from peaks by US tech titans, including Nvidia and Amazon, which have been at the forefront of the global surge owing to huge AI bets.

Another key driver of the gains has been expectations that the Fed will cut borrowing costs several times this year, with last week's reduction followed by forecasts that two more were in the pipeline.

However, comments from key officials stoked uncertainty among investors.

Fed boss Jerome Powell warned there was "no risk-free path".

"If we ease too aggressively, we could leave the inflation job unfinished and need to reverse course later to fully restore two-percent inflation," he said at an event in Rhode Island.

But he added: "If we maintain restrictive policy too long, the labour market could soften unnecessarily."

The remarks came as Atlanta Fed chief Raphael Bostic and Chicago counterpart Austan Goolsbee warned of more inflation.

However, governor Michelle Bowman called on her colleagues to slash rates amid fears they were "at serious risk of already being behind the curve in addressing deteriorating labour market conditions".

"Now that we have seen many months of deteriorating labour market conditions, it is time for the committee to act decisively and proactively to address decreasing labour market dynamism and emerging signs of fragility," she said in prepared remarks ahead of an event in Kentucky.

Investors are now awaiting the release on Friday of the personal consumption expenditure (PCE) index, the Fed's favoured gauge of inflation, and key jobs figures the week after.

New governor Stephen Miran, who was appointed by Donald Trump, also called for more reductions.

"Given the indications for the Administration's dovish reaction function for the Fed, the probability for a policy mistake potentially rises, particularly amid three specific drivers that could keep inflation elevated well into 2026," said Daleep Singh, of PGIM.

He pointed to signs that US tariff effects were begining to emerge, a drop in labour supply that is almost as fast as demand -- hitting wages and prices -- and stimulative fiscal policy "likely contributing to the largest non-war and recession deficits in US history".

Hong Kong rallied with Shanghai thanks to a surge of more than nine percent in Alibaba after CEO Eddie Wu unveiled plans to ramp up AI spending by about $53 billion.

"The industry's development speed far exceeded what we expected, and the industry's demand for AI infrastructure also far exceeded our anticipation," Wu told an audience at the firm's annual developer conference in Hangzhou, China.

"We are actively proceeding with the 380 billion (yuan) investment in AI infrastructure, and plan to add more," he added.

"To embrace the arrival of the ASI (artificial superintelligence) era, the energy consumption scale of Alibaba Cloud's global data centres will increase by tenfold by 2032, compared with 2022, the first year of GenAI."

There were also gains in Hong Kong-listed Tencent, JD.com and Meituan.

Elswhere in Asia, Tokyo, Jakarta, Bangkok and Wellington rose but Sydney, Seoul, Singapore, Taipei and Manila slipped.

London, Frankfurt and Paris fell at the open.

- Key figures at around 0715 GMT -

Tokyo - Nikkei 225: UP 0.3 percent at 45,630.31 (close)

Hong Kong - Hang Seng Index: UP 1.4 percent at 26,515.49

Shanghai - Composite: UP 0.8 percent at 3,853.64 (close)

London - FTSE 100: DOWN 0.1 percent at 9,218.56

Euro/dollar: DOWN at $1.1790 from $1.1816 on Tuesday

Pound/dollar: DOWN at $1.3497 from $1.3524

Dollar/yen: UP at 148.04 yen from 147.66 yen

Euro/pound: DOWN at 87.35 pence from 87.37 pence

West Texas Intermediate: UP 0.1 percent at $63.46 per barrel

Brent North Sea Crude: FLAT at $66.98 per barrel

New York - Dow: DOWN 0.2 percent at 46,292.78 (close)

(U.Gruber--BBZ)