Chinese Stocks Surge: Alibaba Up 10%, Baidu 8% on AI, Cloud Optimism

On the evening of September 24, Beijing time, U.S. stocks opened higher, with the Dow Jones Industrial Average slightly up by 0.12%, the Nasdaq Composite Index down by 0.02%, and the S&P 500 Index up by 0.01% by around 10:30 PM.

Chinese assets experienced a significant late-night surge, with Alibaba Group Holding Ltd. rising nearly 10% and Baidu Inc. surging over 8%. The Nasdaq Golden Dragon China Index, which tracks the performance of Chinese companies listed on U.S. exchanges, jumped over 3.7%.

Alibaba's shares reached their highest level since October 2021, with Alibaba Group Holding Ltd. (9988.HK) on the Hong Kong Stock Exchange rising over 9% to a high of 174.9 Hong Kong dollars. This surge came as Alibaba announced a collaboration with NVIDIA on Physical AI, part of its broader initiative to invest 380 billion yuan in AI infrastructure, with plans for further substantial investments.

Baidu's shares opened over 8% higher, driven by institutional optimism about its cloud computing, autonomous driving, and self-developed chip businesses, which are seen as opening up significant valuation potential.

Pony.ai, a self-driving technology company, saw its shares rise over 4%, nearing its historical high. This followed an upgrade by an analyst from a major investment bank, who maintained a "buy" rating and increased the target price from $26 to $27.70. Additionally, Pony.ai announced a partnership with ComfortDelGro, Singapore's largest transport operator, to deploy autonomous vehicles, pending regulatory approval.

This surge in Chinese assets comes amidst a broader market context where the Federal Reserve's recent rate cut and Chairman Jerome Powell's comments have drawn significant attention. Powell highlighted the increasing downside risks to the labor market as a key reason for the rate cut, signaling a shift to a "neutral" policy stance with no predetermined future direction.

Despite the rate cut, Powell acknowledged that inflation remains slightly above the target, with August's core PCE inflation rate expected to be 2.3%. The market generally anticipates two more rate cuts this year, although internal disagreements persist.