Semiconductors drive Asian stocks higher despite Red Sea oil spike
A sustained semiconductor rally pushed Asian equities higher for a second day, though rising oil prices and looming Federal Reserve rate hike risks kept currency and bond markets cautious.
Asian equities extended gains for a second consecutive session, underpinned by continued buying in semiconductor shares. Japan’s Nikkei 225 added 0.34%, while Australia’s S&P/ASX 200 edged up 0.12%. The broader Topix index finished largely flat.
The regional appetite for chip stocks mirrored a rebound on Wall Street, where the VanEck Semiconductor ETF surged 4% in the previous session. That US rally was driven by renewed investor interest in artificial intelligence-linked companies, which helped offset broader concerns about corporate profitability following stronger-than-expected earnings from industrial giants 3M and General Motors.
Equities successfully weathered a simultaneous escalation in energy prices. Brent crude climbed 0.6% to $91.55 a barrel, hitting a five-week high. The spike followed reports that two oil tankers carrying Saudi crude to Asia turned back in the Red Sea on Tuesday after threats of attacks by Iran-backed Houthi rebels, amplifying tensions between the US and Iran.
Despite the geopolitical premium in oil, currency and bond markets showed limited immediate reaction as investors positioned themselves ahead of a series of central bank meetings next week. The focus is squarely on the US Federal Reserve and its interest rate trajectory.
While a Reuters poll of economists suggests the central bank will hold rates steady for the remainder of 2026, derivatives markets are betting on a more hawkish outcome. CME Group's FedWatch Tool indicates traders are pricing in a probable 25-basis-point rate hike by December. Furthermore, the market sees an evenly balanced probability of cumulative hikes reaching 50 basis points or more by year-end.
The yield on the benchmark 10-year US Treasury note was marginally higher, up 0.2 basis point to 4.628%. The US dollar index hovered near a one-week high at 101.20. Against the Japanese yen, the greenback slipped 0.1% to 163.06, easing slightly after touching a four-decade high in the prior session. Gold gained 0.5% to $4,097.67 an ounce.
US stock futures were flat overnight, with Dow Jones Industrial Average futures down 16 points and S&P 500 and Nasdaq-100 futures trading near the flatline. Investors are largely pausing ahead of another busy slate of quarterly earnings from major technology and industrial companies.
