Asian Stocks Rise on AI Demand as Oil Prices Fall Amid Supply Reports
Asian stocks rose Wednesday on AI demand, while oil prices dropped as Saudi Arabia resumed pipeline operations. US 20-year bond yields hit a record high.
Asian stock markets traded higher on Wednesday, driven by surging demand for artificial intelligence applications that pushed the technology sector upward. Meanwhile, oil prices dropped further following reports of increased supply in the Middle East. Sources told Reuters that Saudi Arabia has resumed operations at the East-West pipeline and reportedly restored export activities from the Red Sea port of Yanbu.
Geopolitical Tensions and Market Impact
On the geopolitical front, US President Donald Trump claimed progress in talks with Iran in New York, while warning that he would destroy the country if an agreement is not reached. Markets are closely monitoring a speech by Iranian President Masoud Pezeshkian at the UN General Assembly later today, amid reports of a potential meeting between him and Donald Trump.
These developments pushed oil prices down: Brent crude futures fell 0.9% to $98.37 a barrel, and US crude dropped 1.3% to $89.32 a barrel. Simultaneously, Chinese President Xi Jinping is expected to arrive in Washington amid assessments regarding the extension of the commercial truce between the nations and potential cooperation in the field of AI.
Stock Performance and Bond Yields
In the equity sector, renewed interest in AI led to a 0.5% increase in the South Korean index, with Samsung shares climbing more than 2%. Taiwan recorded a 0.7% rise near all-time highs, and the MSCI Asia-Pacific ex-Japan index rose 0.3%, completing six consecutive days of gains. Conversely, China's leading stock index retreated by 0.5%. Trading in Japan was closed for a holiday, but Nikkei futures traded at 66,735 points—about 1,700 points above Friday's closing price.
"Asian markets are reacting swiftly to the combination of tech sector momentum and easing energy prices, even as bond yields reflect lingering inflation concerns among Federal Reserve officials."
Wall Street and European futures posted slight gains. The drop in oil prices supported US Treasury futures and kept 10-year yields below 5%, but 20-year yields rose to 4.7879%, a record level since mid-2024. The rise in yields follows support from Federal Reserve officials for the recent rate hike due to inflation concerns, with markets currently pricing in a 54% chance of another rate hike in October.
