Asian Stocks Rise as Oil Rally Eases, Yen Gains: Markets Wrap

(Bloomberg) — Asian stocks rose and oil paused a three-day rally after President Donald Trump played down the prospect of a prolonged conflict with Iran. The yen strengthened.

Gains in Japan and South Korea helped MSCI’s Asia Pacific equities gauge advance 1%. Chip-related stocks including Renesas Electronics Corp. and Samsung Electronics Co. rose after Broadcom Inc. predicted a boom in artificial intelligence chip sales over the next two years.

Early attention in Asia was on the yen, which gained for a second session, strengthening as much as 157.82 per dollar. The currency’s advance kept traders on alert for further intervention by authorities. Also in Japan, the 30-year yield fell 10 basis points to 4.065% ahead of a sale of government bonds.

Adding to the positive tone, Brent halted a three-day rally, trading a touch lower at around $95.50 a barrel. Oil eased after Trump said renewed attacks on Iran would likely be short-lived and reiterated his claim that the US controls the Strait of Hormuz. The pullback in crude reduced pressure on Treasuries, which held gains from the previous session.

The brighter tone followed a cautious start to September, when global bond yields surged as renewed fighting in Iran drove oil higher, fueling inflation concerns and bets on a Federal Reserve interest-rate hike this month. With earnings season largely over, attention is shifting to Friday’s US jobs report for clues on the US economy and the policy outlook.

“The Asian equity markets are posting a moderate recovery from yesterday’s sell-off, supported by the rebound in semiconductor, AI-related stocks given positive guidance from US tech companies overnight,” said Jason Lui, head of APAC equity derivatives strategy at BNP Paribas.

In other corners of the market, natural gas futures in Europe gained for a fourth day to head for the highest close since early 2023. Base metals prices also advanced, with copper in London trading less than $300 a ton below the record set in January.

A Bloomberg gauge of the dollar slipped for a second day. The Treasury 10-year yield was little changed after tensions in the Middle East sparked a selloff in global bonds earlier this week.

US 10-year Treasury yields are consolidating around the 4.78% level as investors await initial jobless claims data due later Thursday. The ongoing Iran war is also stoking fresh concerns around inflation, keeping investors wary on bonds.

“You have these multiple unresolved issues, multiple unresolved conflicts, and importantly, no clear resolution timeline anywhere,” wrote Natalia Lojevsky, managing director at CIFC Asset Management. “Investors need to be careful when they step in,” she said, adding that “at some point, higher yields are a painful experience for equities.”

In Asia, the sharp rise in the yen during the New York session left traders on alert for signs of further action by Japanese authorities to support the currency.

What Bloomberg Strategists Say…

“USD/JPY briefly dipped below the 158 line as rate traders start pricing in a bigger than 25-bp rate hike at the next Bank of Japan meeting.”

— Mark Cranfield, Markets Live strategist. For full analysis, click here.

The yen began strengthening Wednesday after a Bank of Japan board member raised the possibility of outsized or back-to-back interest-rate hikes. The sudden move in New York trading reverberated across the $9.5-trillion-a-day currency market.

“There has been no confirmation of official intervention, but the speed of the move is likely to keep traders focused on the possibility of action from Japanese authorities should yen strength accelerate further,” wrote Nick Twidale, chief market analyst at AT Global Markets.

Corporate Highlights:

Nvidia Corp. Chief Executive Officer Jensen Huang called on Group of 20 nations to accelerate their adoption of artificial intelligence as a way to enhance growth. Meta Platforms Inc. released its most powerful artificial intelligence model yet, with its chief AI officer saying its capabilities are edging closer to top competitors. Elliott Investment Management has built a sizeable stake in Deutsche Telekom AG and indicated the German telecommunications giant should ditch a potential merger with its American arm T-Mobile US Inc., people familiar with the matter said. Some of the main moves in markets:

Stocks

S&P 500 futures were little changed as of 12:03 p.m. Tokyo time Japan’s Topix rose 1% Australia’s S&P/ASX 200 rose 0.5% Hong Kong’s Hang Seng rose 0.3% The Shanghai Composite rose 0.3% Euro Stoxx 50 futures were little changed Currencies

The Bloomberg Dollar Spot Index fell 0.1% The euro was little changed at $1.1592 The Japanese yen rose 0.5% to 157.92 per dollar The offshore yuan was little changed at 6.7179 per dollar The Australian dollar was little changed at $0.7163 Cryptocurrencies

Bitcoin rose 0.4% to $77,717.17 Ether rose 0.4% to $2,403.57 Bonds

The yield on 10-year Treasuries was little changed at 4.77% Japan’s 10-year yield declined five basis points to 2.960% Australia’s 10-year yield declined five basis points to 5.18% Commodities

West Texas Intermediate crude rose 0.2% to $91.15 a barrel Spot gold rose 0.9% to $4,421.67 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Ruth Carson and Jake Lloyd-Smith.

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