SK Hynix, other chip stocks climb as Asian equities advance

ASIAN stocks rose and oil paused a three-day rally after US President Donald Trump played down the prospect of a prolonged conflict with Iran. The yen strengthened.

MSCI’s Asia-Pacific equities gauge advanced 1.1 per cent, rebounding from Wednesday’s sell-off. Chip-related stocks including Renesas Electronics and SK Hynix rose after Broadcom predicted a boom in artificial intelligence chip sales over the next two years.

Among the main moves in markets, S&P 500 futures were little changed as at 1.02 pm Tokyo time. Japan’s Topix rose 1 per cent, Australia’s S&P/ASX 200 rose 0.5 per cent, Hong Kong’s Hang Seng was little changed and the Shanghai Composite rose 0.4 per cent.

Futures indicated a tepid open in Europe, while contracts for the Nasdaq 100 Index edged up 0.2 per cent.

Attention in Asia was on the yen, which gained for a second session, strengthening to as much as 157.63 per US dollar. The currency’s spike left traders guessing about possible intervention by authorities.

Elsewhere in Japan, an auction of 30-year government bonds drew strong demand. The 30-year yield earlier fell 10 basis points to 4.065 per cent.

Adding to the positive tone, Brent halted a three-day rally, trading a touch lower at around US$95.40 a barrel. Oil slipped after Trump said renewed attacks on Iran would likely be short-lived and reiterated his claim that the US controls the Strait of Hormuz.

The pullback in crude eased pressure on Treasuries, which held gains from the previous session.

The brighter tone followed a cautious start to September, when global bond yields surged as renewed fighting in Iran drove oil higher, fuelling inflation concerns and bets on a US Federal Reserve interest rate hike in September.

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With earnings season largely over, attention is shifting to Friday’s US jobs report for clues on the US economy and the policy outlook.

“The Asian equity markets are posting a moderate recovery from yesterday’s sell-off, supported by the rebound in semiconductor, AI-related stocks given positive guidance from US tech companies overnight,” said Jason Lui, head of Apac equity derivatives strategy at BNP Paribas.

In other corners of the market, natural gas futures in Europe gained for a fourth day to head for the highest close since early 2023. Base metals prices also advanced, with copper in London trading less than US$300 a tonne below the record set in January.

A Bloomberg gauge of the US dollar slipped 0.2 per cent for a second day. Gold rose 1.2 per cent to about US$4,430 an ounce. The Treasury 10-year yield was little changed at 4.77 per cent after tensions in the Middle East sparked a sell-off in global bonds earlier this week. 

“You have these multiple unresolved issues, multiple unresolved conflicts, and importantly, no clear resolution timeline anywhere,” wrote Natalia Lojevsky, managing director at CIFC Asset Management.

“Investors need to be careful when they step in,” she said, adding that “at some point, higher yields are a painful experience for equities”.

In Asia, the sharp rise in the yen highlighted the nervous tension surrounding the currency in the run up to the Bank of Japan’s (BOJ) meeting later in September.

The yen began strengthening earlier on Wednesday, after a BOJ board member raised the possibility of outsized or back-to-back interest rate hikes.

Overnight index swaps are now more than fully pricing in a standard 25-basis-point rate hike at the BOJ’s September meeting. Pricing suggests only a very low likelihood of a 50-basis-point move. 

“Clearly, this was not a full-scale intervention given the modest scale of the move, but something certainly triggered the algos,” Chris Weston, head of research at Pepperstone Group, wrote in a note. BLOOMBERG