Australia stocks higher at close of trade; S&P/ASX 200 up 0.55%

Investing.com-- Most Asian stocks kept to a tight range on Thursday as investors digested a hawkish hold from the U.S. Federal Reserve, while technology shares remained on edge following mixed cues on artificial intelligence.

Australian shares continued to outperform their peers, hitting a record high on growing bets that the Reserve Bank of Australia will cut interest rates in February.

Caution over U.S. President Donald Trump’s plans for trade tariffs- which could materialize as soon as this Saturday- kept markets on edge.

Regional trading volumes remained muted on account of market holidays in China, Hong Kong, Singapore, Taiwan, and South Korea, for the Lunar New Year. Chinese markets will be closed for the remainder of the week.

Asian markets took a weak lead-in from Wall Street, which closed lower on Wednesday after the Fed kept rates steady but struck a hawkish chord on future easing, amid sticky inflation.

Mixed earnings from Microsoft Corporation (NASDAQ:MSFT) and Tesla Inc (NASDAQ:TSLA) also underwhelmed, especially as the former clocked soft earnings in its Azure cloud unit, which is at the heart of its AI ambitions. The company also defended its commitment to continue investing billions in furthering its AI capabilities.

But Wall Street futures rose in Asian trade, shrugging off early losses as Trump said he will help bring down inflation through policy changes and deregulation of banks.

Japan stocks flat as tech weakness persists

Japan’s Nikkei 225 and TOPIX indexes barely moved on Thursday, as sustained losses in technology stocks were offset by resilience in other sectors, especially those with domestic exposure.

SoftBank Group Corp. (TYO:9984) fell over 1%, extending an over 12% decline from the past three days after the Financial Times reported that the tech conglomerate will invest up to $25 billion in OpenAI.

The report comes amid growing uncertainty over outsized investment in AI, especially after China’s DeepSeek R1 AI model claimed to be able to match the performance of its rivals while using a fraction of their resources.

Concerns over DeepSeek had triggered sharp losses in global tech stocks this week, with the sector still struggling to recover.

Australian stocks hit record high on rate cut bets

Australia’s ASX 200 rose 0.8% to a record high of 8,515.70 points, extending strong gains from the prior session.

Australian markets were boosted chiefly by increased bets that the RBA will cut interest rates and kick off an easing cycle in February, after consumer inflation data read softer than expected for the fourth quarter.

But core inflation still remained above the RBA’s 2% to 3% annual target, sparking doubts over just how much headroom the RBA has to keep cutting rates.

ANZ and Westpac analysts said they expect a 25 basis point cut when the RBA meets in mid-February.

Among broader Asian markets, futures for India’s Nifty 50 index pointed to a mildly positive open, as the index extended a recovery off seven-month lows hit this week.

Philippine shares dipped 0.1% after gross domestic product data read weaker than expected for the fourth quarter.

Investing.com-- Shares of Zip Co Ltd (ASX:ZIP) fell sharply on Thursday after the Australian 'buy now, pay later' provider reported quarterly earnings that missed market expectations despite record revenue and transaction volume.

Zip reported a total transaction volume (TTV) of A$3.4 billion ($2.12 billion) for the second quarter, a 24.8% increase from the prior year

It reported revenue of A$269.4 million, up 20.5% year-on-year. However, its revenue margin declined to 7.9% from 8.2%, suggesting pricing pressures.

The company delivered cash pre-tax cash earnings of A$35.3 million, a 50.2% jump from the previous year, but missed analysts' expectations of more than A$40 million.

Zip shares fell as much as 26% to A$2.43 in early trade on Thursday.

Investors reacted negatively, focusing on tightening margins and potential regulatory hurdles in the BNPL sector. Analysts suggested that while Zip’s topline growth remains strong, profitability concerns and sector-wide headwinds could limit upside potential in the near term.

The broader S&P/ASX 200 index was up 0.7%.

Investing.com -- Mizuho initiated coverage on MicroStrategy with an Outperform rating and a $515 price target on Wednesday, citing its unique corporate structure and strong correlation with Bitcoin price appreciation.

“MSTR Stock Benefits from Bitcoin Price Appreciation; We Expect Bitcoin To CAGR at 25-30% through 2027, albeit with Extreme Volatility,” said the firm.

MicroStrategy’s strategy revolves around raising capital through debt and equity issuances to accumulate Bitcoin, with the goal of growing its Bitcoin holdings per diluted share.

Mizuho (NYSE:MFG) notes that MSTR currently trades at a ~75% premium to the underlying value of its Bitcoin holdings, leveraging this valuation premium to issue convertible bonds and equity at favorable terms. This structure enables the company to accrete Bitcoin per share at a faster rate than its share dilution.

The firm highlights MicroStrategy’s 21/21 Plan, which aims to raise $21 billion each in debt and equity by 2027 to acquire more Bitcoin.

“We believe favorable market conditions put MSTR on a fast track to exceed targets (already raised $3bn/$18bn of debt/equity since October announcement,” added the firm.

Mizuho’s valuation model assigns a 1-2x EV/revenue multiple to MSTR’s software business ($750 million), a 9x multiple to its Bitcoin treasury operations ($61 billion), and assumes Bitcoin holdings of 783,000 at a projected $166,000 per BTC in 2027 ($130 billion total value).

“At an estimated 374mn fully diluted shares, this implies base case equity value per share of $515,” writes Mizuho.

While the firm acknowledges Bitcoin’s extreme volatility and lack of intrinsic value, it believes rising adoption, a finite supply, and a favorable political environment under President Trump will drive significant upside for MSTR.