Asian tech stocks rise as oil advances; South Korea’s Kospi up 2.8%

TECHNOLOGY shares led gains in Asian equities while crude oil climbed as traders remained wary about the prospects for a Middle East deal, tempering the mood in the run-up to crucial US inflation data.

Global benchmark Brent rose 0.8 per cent to US$89.60 a barrel, extending its rally to a sixth day.

The advance came as both sides appeared to harden their positions in the long-deadlocked negotiations over the Strait of Hormuz, despite Pakistan’s defence minister saying the US and Iran are “close to some sort of arrangement”.

Sentiment towards technology remained buoyant, with Nvidia-backed CoreWeave surging 16 per cent in extended trading after booming artificial intelligence spending drove stronger-than-expected sales growth.

Super Micro Computer rallied 7.6 per cent in the post market after its revenue forecast topped estimates.

The robust tech earnings helped MSCI’s Asia-Pacific equities gauge advance 0.4 per cent, with South Korea’s tech-heavy Kospi Index adding 2.8 per cent. US equity-index futures were little changed.

Among the main moves across markets, S&P 500 futures were little changed as at 10.38 am Tokyo time.

Nikkei 225 futures (OSE) fell 0.3 per cent, Japan’s Topix rose 0.4 per cent and Australia’s S&P/ASX 200 fell 0.5 per cent. Meanwhile, Hong Kong’s Hang Seng fell 0.8 per cent and the Shanghai Composite was little changed.

The guarded tone in markets, ahead of Wednesday’s US consumer price index (CPI) reading, highlights how investors are weighing persistent geopolitical risks against uncertainty over the Federal Reserve’s next move on interest rates.

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Hopes for a breakthrough in Middle East negotiations was damped after optimism about an imminent deal boosted risk assets last week.

“As each day passes without a resolution, market angst is steadily increasing,” Tim Waterer, chief market analyst at KCM Trade, wrote in a note.

“Traders are growing more concerned that both sides are advancing demands that only add complexity and therefore reduce the likelihood of a workable deal materialising in the near term.”

In other corners of the market, the yen was little changed around 159.33 a US dollar.

Investors are watching the currency as it approaches the key level of 160, raising concern that Japanese authorities will intervene again. The dollar weakened against most of its G10 peers.

Treasuries steadied with the yield on the benchmark 10-year note little changed at 4.69 per cent. Gold recovered some of Tuesday’s losses to trade around US$4,390 an ounce.

The US CPI print is expected to show that energy-related pressures have eased after intensifying in the months immediately following the start of the Iran war. 

The headline gauge probably rose 0.1 per cent in July following a 0.4 per cent decline in the prior month, based on the median projection in a Bloomberg survey of economists ahead of Wednesday’s Bureau of Labor Statistics release.

A softer reading may help alleviate some concern after three officials at the Federal Open Market Committee (FOMC) dissented in July in favour of raising interest rates.

“Today’s inflation print is likely to be pivotal for September FOMC pricing, while a range-bound US dollar continues to favour carry trades,” OCBC strategists including Moh Siong Sim wrote in a report.

Meanwhile, “renewed oil volatility is a reminder that oil-sensitive Asian foreign exchange is not yet out of the woods”.

US data on Tuesday offered a mixed picture of the economy.

Sales of existing homes fell to a three-month low as elevated prices and mortgage rates continued to weigh on the housing market.

Small business optimism climbed to the highest in almost a year as firms stepped up hiring plans and inflation pressures eased.

“We see crude oil prices driving the war narrative, with price swings likely to dictate the pace of escalation and de-escalation,” said Elias Haddad at Brown Brothers Harriman & Co. BLOOMBERG