Escalating tensions in the Middle East have pushed Brent crude oil towards the $100 per barrel milestone, while Asian semiconductor stocks continued their upward trajectory, fueled by sustained enthusiasm for artificial intelligence investments. SK hynix saw its shares climb over 3%, with gold and silver also posting gains.
South Korea's KOSPI index expanded its intraday gains to 2% on Wednesday, with heavyweight names like Samsung Electronics and SK hynix both advancing. This followed a 1.3% rise in the Philadelphia Semiconductor Index during US trading on Tuesday. The broader MSCI Asia Pacific Index added 0.6%, with the information technology sector providing the most significant boost.
US military forces destroyed five Iranian crude oil tankers on Tuesday in retaliation for two ballistic missile attacks launched by Iran's Islamic Revolutionary Guard Corps against American warships over the preceding two days. This aggressive action sent Brent crude up as much as 1.8% to $99.67 per barrel, bringing its year-to-date advance to over 60%.
Where the AI momentum is building
Chip stocks are extending their recent strong performance, standing out as a key highlight across Asian markets. Qualcomm has announced a collaboration with Amazon to develop custom chips for AWS artificial intelligence infrastructure. This multi-generational partnership covers both chips powering AI services and those facilitating internal component connectivity within computers. Qualcomm indicated that related chip orders could reach as high as $60 billion over the next decade.
This AI investment fervor persisted into Wednesday's morning session, with the KOSPI at one point surging more than 2% intraday. The MSCI Asia Pacific Index rose 0.6%, led by its information technology sector. Both SK hynix and Samsung Electronics recorded gains, with the former at one point jumping close to 5%.
Japan's Nikkei 225 and Topix indices pared their earlier gains, falling back to a 0.3% advance in morning trade, while Australia's S&P/ASX 200 slipped 0.3%.
Oil holds firm, yen stays strong
Energy markets remain the primary focus of the day's trading. The US military's destruction of five Iranian oil tankers on Tuesday, a response to Iran's Revolutionary Guard firing ballistic missiles at American warships, has escalated the conflict. Iran subsequently launched a missile at Jordan and, via state television citing a Revolutionary Guard statement, warned all tanker crews near Kuwaiti and Bahraini terminals to abandon ship immediately.
Brent crude rose as much as 1.8% to $99.67 a barrel, while WTI crude gained over 1.3% to trade above $94 a barrel. The ongoing risk of attacks on energy infrastructure has cast greater uncertainty over supply prospects through the Strait of Hormuz, a vital global oil export chokepoint.
Darrell Fletcher, managing director of commodity business at Bannockburn Capital Markets, noted that oil prices face the "path of least resistance is strongly and steadily higher." He added that product fundamentals remain bullish, with global inventories and reserves continuing to decline, and following customary patterns, the US and Iran will likely continue their reciprocal strikes and warnings.
The surge in oil prices is amplifying concerns over inflation and the trajectory of interest rates. The yield on 10-year US Treasuries briefly surpassed the key 4.8% level on Tuesday and held near that threshold during Asian morning trading.
In currency markets, the Japanese yen strengthened for a third consecutive day, trading near 153.4 against the dollar. The Bloomberg Dollar Spot Index edged down 0.1%. US Treasury Secretary Bessent publicly challenged market bears by claiming he effectively has access to insider information when making market judgments, a statement that provided some support for the yen.
Spot gold rose 0.54% to $4,372.77 per ounce, while bitcoin inched up 0.4% to $78,803. Spot silver at one point jumped over 1% before paring gains to 0.8%, remaining within its consolidating triangle pattern.
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