Asian Stocks Rise as US Inflation, Tech Spur Gains: Markets Wrap

(Bloomberg) — Asian stocks rose, adding to a fourth week of gains, as moderating US inflation reinforced bets that the Federal Reserve will refrain from raising interest rates next month. Technology stocks extended their rebound.

MSCI’s Asia Pacific equities gauge climbed 0.5%, taking its weekly advance to 2.7%. South Korea’s Kospi Index, a bellwether for the artificial intelligence trade, led the region, with Samsung Electronics Co. and SK Hynix Inc. taking their gains for the week to more than 15%.

Advances in Asia on Friday came as investors redoubled their bets on the AI trade after last month’s selloff, sending MSCI’s All Country World Index to a record high this week. The S&P 500 Index closed at an all-time high Thursday, while the Nasdaq 100 climbed more than 1% to its highest level since late June.

“The modest easing of uncertainty surrounding US monetary policy has become catalyst for tech rebound,” said Yugo Tsuboi, chief strategist at Daiwa Securities Co. “With US inflation showing no signs of worsening, excessive concerns over the Fed turning hawkish have eased. That is prompting buying particularly in high-growth stocks.”

Elsewhere, Treasuries held Thursday’s advance after US wholesale inflation cooled in July. The yield on the rate-sensitive two-year note was little changed at 4.15%, after falling six basis points in the prior session. Money markets are now pricing in about a 35% chance of a Fed rate increase in September.

Back-to-back benign inflation prints, following last week’s softer-than-expected jobs report and a pullback in oil prices, are easing pressure on the Fed to tighten policy at its meeting next month. While the lack of a deal in the Middle East remains a concern, equity traders are also focusing on a revival in the AI trade after a selloff in semiconductor stocks in July.

“The next round of data that we get in September and the lead up to the meeting will be pretty critical,” said BofA Securities economist Stephen Juneau. At the same time, “the market obviously has started to really discount hikes more and more given that the data in recent months has been more dovish.”

US wholesale inflation decelerated by more than economists forecast in July. The producer price index rose 4.7% from a year earlier, down from a 5.5% annual increase in June, and was unchanged from the previous month.

In other corners of the market, Brent held its losses from the prior session, trading around $87.10 a barrel. Gold slipped 0.7% to $4,320 an ounce. China’s 10-year bond yield fell to the lowest since July last year after the central bank conducted reverse repos on Friday, its first such operation in the middle of a month.

A Bloomberg gauge of Asian chip-related stocks rallied almost 1%, a fifth day of gains.

“A huge amount of hyperscaler money is flowing into hardware,” said Hitoshi Asaoka, chief strategist at Asset Management One. “That is translating into extremely strong sales and profit growth for hardware companies. Investors are returning to the idea of, ‘let’s look at the earnings themselves again.’”

Even as Treasuries rallied Thursday, the US sold 30-year bonds at the highest yield in a quarter century, underscoring the premium investors are demanding to finance the nation’s deficits.

The Trump administration is applying a 100% tariff on imports of unmanned aircraft systems and their components in a bid to cut the US’s reliance on foreign supplies of drones.

In Asia, the yen remained within striking distance of 160 per dollar, even after Prime Minister Sanae Takaichi’s government was said to support an interest-rate increase. The Japanese currency was little changed Friday, near 159.40 per dollar.

The Bank of Japan is likely to raise rates in either September or October, according to people familiar with the matter. Concerns at the central bank that yen weakness will fuel inflation are converging with the government’s desire to reinforce the impact of recent US-Japan currency intervention, strengthening the case for a near-term hike, the people said.

Corporate Highlights:

OpenAI is on track to generate annualized revenue of more than $40 billion based on its current performance, according to people familiar with the matter, roughly doubling its run rate from the end of 2025 and bolstering the company’s plans for a Wall Street debut. Applied Materials Inc. delivered an estimate-beating forecast that still got a lukewarm reaction from investors, a sign of the lofty hopes surrounding a company that’s key to the AI boom. Advanced Micro Devices Inc. raised $4.75 billion in its biggest-ever US dollar bond offering, adding to a wave of debt tied to the AI boom. JD.com Inc. posted its first quarterly revenue decline since listing in 2014, in the latest sign of waning Chinese consumer sentiment. Some of the main moves in markets:

Stocks

S&P 500 futures were little changed as of 11:47 a.m. Tokyo time Japan’s Topix rose 0.7% Australia’s S&P/ASX 200 fell 0.8% Hong Kong’s Hang Seng fell 0.7% The Shanghai Composite fell 0.2% Euro Stoxx 50 futures rose 0.3% Currencies

The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1536 The Japanese yen was little changed at 159.41 per dollar The offshore yuan was little changed at 6.7447 per dollar Cryptocurrencies

Bitcoin rose 0.2% to $63,483.83 Ether rose 0.1% to $1,887.5 Bonds

The yield on 10-year Treasuries was little changed at 4.65% Japan’s 10-year yield declined one basis point to 2.855% Australia’s 10-year yield was little changed at 4.98% Commodities

West Texas Intermediate crude was little changed Spot gold fell 0.8% to $4,315.52 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Aya Wagatsuma, Momoka Yokoyama and Elaine Lai.

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