Tech shares lead gains in Asian stocks, oil rises

Technology shares led gains in Asian equities following a rally in their US info-tech peers on Sept 4. Oil climbed after the US and Iran exchanged attacks involving tankers in the Strait of Hormuz.

The MSCI Asia Pacific index rose 1.1 per cent, with South Korean chipmakers SK Hynix and Samsung Electronics the biggest contributors.

The advance came after the Nasdaq 100 Index closed 0.2 per cent higher on Wall Street and the Philadelphia Semiconductor Index jumped 3.4 per cent. Most US shares fell on Sept 4 though as robust numbers for payrolls boosted bets on a Federal Reserve interest-rate hike.

The biggest driver behind the South Korean chipmakers’ gains is optimism about a new model from OpenAI, which pushed US chip stocks higher, said Kim Nam-ho, a fund manager at Timefolio Investment Management in Seoul.

OpenAI said last week it is releasing a new generation of its technology, called GPT-6, that the company is positioning as a key milestone in its decade-long push to build so-called artificial general intelligence.

In other assets, the yen edged higher, while Treasury 10-year futures were little changed. There is no trading of cash Treasuries worldwide on Sept 7 because of a US public holiday.

Brent crude rose as much as 0.8 per cent to trade near US$97 a barrel before trimming its gains, while West Texas Intermediate was around US$92. European natural gas prices climbed as much as 4.2 per cent in thin trading.

The US said it launched strikes against three Iranian oil tankers over the weekend, destroying one, in retaliation for ballistic-missile attacks on US Navy warships.

In response, Iran’s top security official said a new restricted zone outside the Strait of Hormuz will be declared in the coming days, beginning at the US Navy blockade line and extending into parts of the Persian Gulf, Press TV reported.

The latest attacks suggest little immediate prospect of an end to the war the US and Israel launched against Iran more than six months ago, adding to inflation concerns.

That puts added focus on US inflation data this week after stronger-than-expected US payroll numbers on Sept 4 nudged up bets on a Federal Reserve interest-rate hike in September.

“A Sept 16 Fed funds rate hike hinges on Friday’s US August CPI print,” Elias Haddad, global head of markets strategy at Brown Brothers Harriman, wrote in a note to clients.

“A hot CPI print would all but seal a September hike and underpin a firmer US dollar. A cooler reading would strengthen the case for a hold and leave the US dollar vulnerable to a dovish Fed repricing.”

The yen inched higher amid speculation that Japan’s Government Pension Investment Fund may boost allocations toward domestic assets and as traders weighed a potential interest-rate increase by the central bank in September.

The currency strengthened by as much as 0.3 per cent to 155.80 per dollar.

“We are still trading in the wake of last week’s GPIF news,” said Abbas Keshvani, director of Asia macro strategy at RBC Capital Markets.

“Potential rotation by the fund could help stabilise the Japanese government bond market and get the yen recovery started before next year.”

Elsewhere, China’s Ministry of Finance will inject 300 billion yuan (S$56.6 billion) in special bonds into its largest banks and insurers, part of the nation’s biggest recapitalisation in almost two decades, to shore up the strength of its financial system and sustain lending as economic growth slows.

European bonds, including German bunds, will also be closely watched on Sept 7 after the far-right Alternative for Germany scored its best-ever result in a state election on Sept 6. The euro was little changed in early Asian trading. 

The AfD secured 44 per cent of the vote in the eastern state of Saxony-Anhalt, more than doubling its support and putting it ahead of the long-governing Christian Democratic Union, whose backing collapsed to 17.5 per cent, according to a projection broadcast by ARD. BLOOMBERG