Asian shares rise as oil’s decline lifts sentiment

ASIAN SHARES rose on Wednesday (Aug 26), led by chipmakers, as a decline in crude oil eased concerns about quickening inflation.

MSCI’s Asia Pacific equities gauge climbed 1 per cent, with Samsung Electronics and SK Hynix the biggest contributors. The regional benchmark was poised for a fourth gain in five sessions. Chip stocks had also advanced on Wall Street, with Nvidia snapping a seven-day run of losses before its earnings later on Wednesday.

As sentiment improved, US equity-index futures erased all losses and traded little changed. European shares were set for gains at the start.

Brent fell 2.6 per cent to around US$86.25 a barrel as Iran and Oman discussed an “interim framework” aimed at resuming shipping through the Strait of Hormuz. Crude’s 8.5 per cent decline this week has eased inflation concerns, helping government bonds rally.

Treasuries held gains from Tuesday, when the benchmark 10-year yield fell seven basis points. Government bonds in Japan and New Zealand advanced, while those in Australia erased earlier gains and fell after an inflation report boosted bets on an interest-rate hike.

The retreat in oil offered some relief to markets after persistent inflation and elevated yields had weighed on risk appetite. Three key events may shape trading this week – Nvidia’s results on Wednesday for clues on whether the AI rally can regain momentum, the release of the US Personal Consumption Expenditures gauge on Wednesday and US Federal Reserve chair Kevin Warsh’s Jackson Hole speech on Friday for signals on the path of interest rates.

“Although the mountain of event risk is casting a slight shadow over the markets, the easing of geopolitical risks and subsequently lower oil price has been enough to offset the trepidation,” Kyle Rodda, a senior analyst at Capital.com, wrote in a note.

In other corners of the market, the Canadian dollar was steady after Canadian Prime Minister Mark Carney matched new tariffs imposed by US President Donald Trump and announced support for businesses hurt by the escalating trade dispute with the country’s largest trading partner.

The US is weighing more trade measures against Canada over the retaliation.

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Gold fell 0.3 per cent to US$4,645 an ounce, while Bitcoin held around US$79,000.

The AI trade has come under pressure recently as investors question whether the billions of dollars being spent on the technology will generate commensurate returns.

Analysts estimate Nvidia’s revenue nearly doubled from a year earlier to US$92 billion last quarter, more than any of its rivals generate in a full year.

“Nvidia is operating on all cylinders and they’re doing absolutely everything correctly at this point,” said Mark Malek at Siebert Financial. “We’re anticipating good news here, but so is everybody.”

Attention will then shift to the annual Jackson Hole Symposium on Friday, where Warsh will deliver his first major speech as US Fed chair. Investors will be looking for greater clarity on his assessment of the US economy and the path for monetary policy.

Data on Tuesday showed US consumer confidence fell to a seven-month low in August as the outlook for business conditions and the US labour market deteriorated. On Wednesday, investors will turn to the US personal consumption expenditures price index – the US Fed’s preferred inflation gauge.

“It feels like the market is in a holding pattern ahead of a few major results and whatever Kevin Warsh says at Jackson Hole later this week,” said Kieran Calder, head of Asia equity research at Union Bancaire Privee. BLOOMBERG