SK Hynix, South Korea’s Kospi jump as Asian chip stocks gain, crude rises

ASIAN chip stocks extended their recent gains on sustained investor interest in the artificial intelligence trade while escalating Middle East hostilities pushed Brent crude towards US$100 a barrel.  

South Korea’s Kospi climbed 0.5 per cent as the nation’s chip giant SK Hynix edged higher. The advance came after the Philadelphia Semiconductor Index, known as the SOX, gained 1.3 per cent in New York. The MSCI Asia-Pacific Index of shares rose 0.4 per cent.

Among the main moves across markets, S&P 500 futures were little changed as at 9.05 am Tokyo time. Hang Seng futures rose 0.2 per cent, Japan’s Topix climbed 0.4 per cent and Australia’s S&P/ASX 200 increased 0.3 per cent.

Brent advanced 1.5 per cent to US$99.37 a barrel. The advance followed another round of strikes on Middle East energy infrastructure, including US attacks near the key export hub of Kharg Island.

Rising energy prices have prompted traders to price in a more than 50 per cent chance of a US Federal Reserve interest rate increase in September.

With the 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.

Investors will be watching to see whether the latest escalation further disrupts supplies, with Friday’s US consumer price index report set to provide the next major test of expectations for a Fed rate increase at its Sep 15 to 16 meeting.

“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 towards economic pressure on Iran, repeated outbreaks of violence have kept the conflict simmering.

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Earlier, Iran’s semi-official Tasnim news agency reported that a US missile had hit an Iranian tanker off the coast of Kharg.

All tanker crews near Kuwaiti and Bahraini piers should “immediately abandon their vessels, whether at anchor or docked, as they will be targeted”, Iran’s state TV reported, citing an Islamic Revolutionary Guard Corps statement.

In trade news, the US moved to ban some Canadian alcoholic beverages, dairy products and motorcycles, according to officials. Meanwhile, the EU and Canada are pursuing a broader partnership spanning trade and security as they seek to counterbalance US and Chinese global influence.

Elsewhere, the yen rose for a third day on Wednesday to around 153.40 per US dollar after US Treasury Secretary Scott Bessent said he has “good insight” into what the Bank of Japan will do with the currency. Bloomberg’s dollar gauge slipped 0.1 per cent.

After a stronger-than-forecast US employment report last week, attention is turning to CPI data due on Friday for clues on future Fed policy.

Economists expect the CPI to have risen 0.4 per cent in August, accelerating from July because of higher petrol costs.

Excluding volatile food and energy components, core CPI is projected to have increased a more moderate 0.2 per cent, according to the median estimate in a Bloomberg survey.

That would bring the annual measure of underlying inflation down to 2.4 per cent, the smallest year-over-year increase since 2021.

“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. BLOOMBERG