Asian Stocks Rise Led by Technology, Oil Rebounds: Markets Wrap

Christopher Verrone, partner and chief market strategist at Strategas, examines market reaction to the Iran war and the policy response he expects from the Federal Reserve. Bloomberg

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(Bloomberg) — Asian equities rose as Nvidia Corp.’s upbeat outlook for artificial intelligence lifted sentiment, with investors keeping a close eye on ship traffic through the vital Strait of Hormuz. Crude oil jumped 2.9%.

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The MSCI Asia Pacific Index advanced 1.2%, with gains led by technology shares such as Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co. South Korea’s benchmark, a bellwether for AI, jumped 2.5%. That came after Nvidia said it expects to generate at least $1 trillion in revenue from AI chips through the end of 2027.

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“Optimism is returning to Asian tech, but it’s earned, not assumed,” said Oriano Lizza, a sales trader at CMC Markets Singapore. “The optimism is real, but it lives in the semiconductor supply chain. Investors need to be precise about where they’re positioned.”

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Asian technology shares — seen as less exposed to the conflict in the Middle East — are drawing renewed attention as the region’s firms are viewed as the “picks and shovels” of the AI supply chain buildout. Stocks have rallied from their April lows, triggered by President Donald Trump’s tariff announcement, on bets that the billions companies are spending on AI will pay off.

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Still, attention was firmly on the oil market with Brent crude advancing to about $103 a barrel — rebounding from Monday’s 2.8% drop — as Iran stepped up attacks on energy infrastructure around the Persian Gulf. US equity-index futures also fell, suggesting the optimism seen on Monday may be beginning to fade.

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Traders remain focused on how policymakers from the Federal Reserve to the European Central Bank and the Bank of England will respond this week to inflation concerns as oil prices rise due to the war in Iran. On Tuesday, the Reserve Bank of Australia raised its key interest rate for a second straight meeting.

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Meanwhile, Trump expressed his frustration with other nations that have so far been publicly noncommittal on his calls to help ensure vessels can transit the strait. Trump also said he had requested China — among those he’s asked for support — to delay a summit with Xi Jinping for about a month, saying it was important for him to remain in Washington to oversee the war. 

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“The possibility that the US-China meeting could be postponed by one month may also be taken as a sign that the war with Iran is likely to drag on longer than expected,” said Hideyuki Ishiguro, chief strategist at Nomura Asset Management. “That would weigh on equity markets.”

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What Bloomberg strategists say…

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“Equities are in a lose-lose situation as a result of the surge in oil prices. The potential that the conflict generates a sustained shift higher for yields also signals more pain for stocks.”

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— Garfield Reynolds, MLIV Asia Team Leader. Click here for the full analysis.

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Trump also renewed calls for allies to help safeguard the Strait of Hormuz. Shipping through the waterbody has ground to a near-halt, but some transit continues, with a spike of Iranian ships.