Asian Shares Rise as Chips Rally, Brent Advances: Markets Wrap

(Bloomberg) — Asian shares climbed, led by chipmakers, as optimism over AI-driven demand rekindled appetite for semiconductor stocks. Oil extended gains after the US struck Iran for a second day.

The MSCI Asia Pacific Index climbed 0.7%, with South Korea’s Kospi — a bellwether for chips and artificial intelligence investments — climbing more than 3%. Futures contracts for the tech-heavy Nasdaq 100 Index erased earlier losses to rise 0.2%.

The chip sector remained in focus after SK Hynix Inc.’s US listing was more than seven times oversubscribed, sending its Seoul-listed shares up by 7.8%. Meanwhile, Bain Capital sold its entire stake in flash memory chipmaker Kioxia Holdings Corp., whose shares have risen more than 650% this year.

Brent rallied for a third day, climbing above $79 a barrel before paring gains. The latest US strikes stoked fears the Middle East conflict will disrupt shipping through the Strait of Hormuz. Treasuries were little changed in early Asian trading after a global bond selloff on Wednesday as traders increased bets the Federal Reserve will need to raise interest rates. Gold steadied after three days of losses to trade around $4,075 an ounce.

The flare-up in Middle East tensions and surge in oil prices have reignited inflation concerns, prompting money markets on Wednesday to bring forward bets on the next Fed rate increase to October from December. Investors nonetheless returned to chipmakers as optimism over AI spending offset some of the broader macro concerns.

“While the development in the Middle East remains a concern, the market does not appear to view it as a time to retreat completely from equities,” said Takashi Ito, a senior strategist at Nomura Securities. “The prevailing logic is that investors can continue to invest in AI and chip stocks, where high long-term returns are expected.”

Thursday’s rebound in chip shares came after semiconductor manufacturers were sold off earlier in the week after Samsung Electronics Co.’s 19-fold increase in profit was still not enough to entice investors.

What Bloomberg Strategists Say…

“This sets up a clarion call to investors who managed to keep some powder dry after the 20% selloff from the Kospi’s June peak. Traders will be looking for a day of above-average turnover and a close in the green to confirm this is a bullish turning point.”

— Mark Cranfield, MLIV. For full analysis, click here.

Investors are also focused on the bond market after Wednesday’s slump.

The two-year Treasury yield, which is sensitive to expectations for Fed policy, rose as much as five basis points during the US session to 4.23%, within a basis point of last month’s high. The 10-year yield climbed as much as four basis points to its highest since late May.

A few Fed officials in their most recent policy meeting said there was a case for raising rates, though they ultimately supported the decision to leave borrowing costs on hold. More generally, minutes of their June gathering reflected growing concern over inflation just as worries over the labor market slightly receded.

Meanwhile, veteran strategist Ed Yardeni said the rupture in the ceasefire between the US and Iran risks sparking a fresh acceleration in price growth, which in turn could compel the Fed to raise rates.

The additional strikes were launched “to further degrade their ability to threaten freedom of navigation in the Strait of Hormuz,” the US Central Command said in a social media post.

“By now, we’ve been through several rounds of escalation and de-escalation, and the market’s grown accustomed to it,” said etoro market analyst Zavier Wong. “Oil spiking on the back of this renewed escalation isn’t all that surprising, but it’s still nowhere near the levels we saw during the initial shock of this conflict.”

Corporate Highlights:

China plans to allow top artificial intelligence companies to buy a limited amount of H200 chips from Nvidia Corp., a sign the country is easing restrictions on the coveted US technology, according to the Information. SpaceXAI has unveiled a new artificial-intelligence model built in partnership with AI coding startup Cursor that’s meant to be more adept at finance, legal and coding tasks. Apple Inc., following through on a pledge to boost spending on US-made components, said its expanded agreement with Broadcom Inc. is expected to top $30 billion. Meta Platforms Inc. will invest around $10 billion to build its first data center in Canada as the company expands its infrastructure to support its AI ambitions. Jeff Bezos’ Blue Origin LLC is embarking on its first external fundraising round, according to people familiar with the matter. Some of the main moves in markets:

Stocks

S&P 500 futures were little changed as of 9:59 a.m. Tokyo time Hang Seng futures fell 0.2% Nikkei 225 futures (OSE) rose 2% Japan’s Topix rose 0.4% Australia’s S&P/ASX 200 fell 0.7% Euro Stoxx 50 futures rose 0.9% Currencies

The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1425 The Japanese yen was little changed at 162.44 per dollar The offshore yuan was little changed at 6.8045 per dollar Cryptocurrencies

Bitcoin was little changed at $62,077.23 Ether was little changed at $1,736.82 Bonds

The yield on 10-year Treasuries was little changed at 4.58% Japan’s 10-year yield advanced two basis points to 2.885% Australia’s 10-year yield advanced two basis points to 4.90% Commodities

West Texas Intermediate crude rose 0.7% to $74.02 a barrel Spot gold was little changed This story was produced with the assistance of Bloomberg Automation.

–With assistance from Stephen Kirkland, Momoka Yokoyama and Bing Hong Lok.

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