Asian chip stocks experienced a remarkable uptick, fueled by sustained investor enthusiasm for artificial intelligence technologies. According to reports from Bloomberg, South Korea's Kospi index climbed 1%, largely due to gains from major chip firms including Samsung Electronics Co and SK Hynix. The advance came after the Philadelphia Semiconductor Index (SOX) rose 1.3% in New York, with equity-index futures for South Korea pointing higher. As per Bloomberg, the MSCI Asia Pacific Index of shares rose 0.4%, with the information technology sector making the biggest contribution to the regional gains. Recent developments include Meta Platforms unveiling a new AI agent designed to carry out tasks on a user's behalf, advancing Mark Zuckerberg's vision of a future where people each have a personalized AI assistant. Qualcomm Inc. signed up Amazon.com as a data center chip customer and investor, scoring a major win in its bid to benefit from soaring AI spending, while Intel Corp. climbed after a report from DigiTimes that the company is expected to raise prices.
Brent crude oil prices gained as much as 1.6% to $99.50 a barrel, reaching the highest level since July. As reported by Bloomberg, crude climbed after the US struck Iranian tankers near the vital crude-export hub of Kharg Island, stoking fears of deeper disruptions through the Strait of Hormuz. With the US-Iran war now in its seventh month, renewed attacks on energy infrastructure risk keeping oil prices elevated and complicating the outlook for inflation and interest rates. According to Bloomberg, West Texas Intermediate crude rose 1.7% to $94.64 a barrel, with the latest escalation pushing prices toward the $100 threshold. Investors will be watching to see whether the latest escalation further disrupts supplies, with Friday's US consumer-price report set to provide the next major test of expectations for a Fed rate increase at its Sept. 15-16 meeting.
Market participants are eagerly anticipating US consumer price data due Friday, which could influence the Federal Reserve's upcoming interest rate decisions. Short-term Treasury yields have risen, while money markets are now pricing in a more than 50% chance of a Federal Reserve rate increase this month. According to Bloomberg, economists expect the consumer price index to have risen 0.4% in August, accelerating from a month earlier partly because of higher gasoline costs. Excluding volatile food and energy components, core CPI is projected to have increased a more moderate 0.2%, which would bring the annual measure of underlying inflation down to 2.4%, the smallest year-over-year increase since 2021. As per Bloomberg, after a stronger-than-forecast US employment report last week, attention is turning to CPI data due Friday for clues on future Fed policy. "Brace for a turbulent week, with inflation data set to swing market expectations for a Fed hold or hike next week – with knock-on effects on wider asset markets," Evercore ISI strategist Krishna Guha wrote in a Tuesday note.
The escalating Middle East hostilities have created additional market volatility, with Iran's semi-official Tasnim news agency reporting that a US missile hit an Iranian tanker off the coast of Kharg. As reported by Bloomberg, Iran's state TV reported that crews near Kuwaiti and Bahraini piers should "immediately abandon their vessels, whether at anchor or docked, as they will be targeted," citing an Islamic Revolutionary Guard Corps statement. With geopolitical tensions and oil prices on the rise, markets may find it difficult to focus on much beyond the inflation discussion. "With geopolitical tensions and oil prices on the rise, the markets may find it difficult to focus on much beyond the inflation discussion," said Chris Larkin at E*Trade from Morgan Stanley. While the US says it has largely shifted its attention toward economic pressure on Iran, repeated outbreaks of violence have kept the conflict simmering.
The yen strengthened for a third day after US Treasury Secretary Scott Bessent said he has "good insight" into what the Bank of Japan will do with the currency, with the yen advancing 0.4% to 153.33 per dollar. According to Bloomberg, the Bloomberg Dollar Spot Index fell 0.1%, with the euro little changed at $1.1631. In trade news, the US moved to ban some Canadian alcoholic beverages, dairy products and motorcycles, according to officials, while the European Union and Canada are pursuing a broader partnership spanning trade and security as they seek to counterbalance US and Chinese global influence. Meanwhile, S&P 500 futures were little changed as of 9:23 a.m. Tokyo time, with contracts for Japan indicating losses on Wednesday. In commodities, spot gold fell 0.3% to $4,344.13 an ounce, while Bitcoin rose 0.2% to $78,661.6 and Ether rose 0.4% to $2,492.43.
