Key facts
- Asian stocks climbed for a sixth straight session, buoyed by AI optimism.
- Oil prices eased as Saudi Arabia restarted its East-West Pipeline, potentially increasing supply.
- US President Donald Trump claimed progress in talks with Iran but also threatened 'annihilation'.
- Chinese President Xi Jinping is set to arrive in Washington amid speculation of a trade truce and AI cooperation.
- South Korean stocks gained 1.2% on AI buzz, with Samsung and SK Hynix up over 2%.
- Two-year Treasury yields reached their highest level since mid-2024 at 4.7879%.
Asian stocks extended their rally on Wednesday, marking a sixth consecutive session of gains, as investor enthusiasm for AI-driven technology stocks persisted. Oil prices, however, softened amid reports of increased supply from the Middle East, specifically Saudi Arabia restarting its East-West Pipeline and potentially resuming exports from the Red Sea port of Yanbu.
US President Donald Trump made contrasting statements regarding Iran, claiming progress in talks while also threatening severe retaliation if a deal was not reached. Markets are monitoring potential discussions between Trump and Iranian President Masoud Pezeshkian at the UN General Assembly.
The tech sector's strength was evident in South Korea, where stocks rose 1.2% on renewed AI buzz, with major players Samsung and SK Hynix both climbing over 2%. Taiwan also saw gains, firming 0.9% and nearing all-time peaks. The MSCI's broadest index of Asia-Pacific shares outside Japan added 0.7%.
On Wall Street, S&P 500 and Nasdaq futures held steady, while European futures indicated a slightly higher open. The easing oil prices provided some relief to Treasury futures, pushing 10-year yields below the 5.0% mark. However, two-year yields reached their highest level since mid-2024 at 4.7879%, reflecting investor expectations of further tightening from the Federal Reserve. Futures markets suggest a 54% chance of another Fed hike in October.
The prospect of higher US interest rates bolstered the dollar, which reached multi-week highs against the euro, sterling, and Canadian dollar. The euro was trading near a two-month low. Concerns about European energy security persist, with potential implications for inflation due to a reliance on US diesel exports and a shortage of natural gas.