Asian equities saw a significant advance, with MSCI’s Asia Pacific equities gauge rising 1.2%, building on Tuesday’s largest one-day gain in a month. This rally was largely driven by the tech sector, evident in South Korea’s Kospi jumping over 5% and a key semiconductor index climbing 5.2%, signaling renewed demand for chipmakers after a recent selloff. Japan's Nikkei also gained 5%.
However, the Japanese yen slid past 163 per dollar for the first time since 1986, intensifying speculation about potential intervention from Japanese authorities. Concurrently, crude oil prices climbed, with Brent crude advancing 0.6% to about $91.50 a barrel after US President Donald Trump downplayed immediate talks with Iran, rekindling inflation concerns that pushed Treasury yields to a two-month high.
Investor attention is now squarely focused on upcoming earnings reports from major tech companies like Alphabet Inc. and Tesla Inc., starting Wednesday. These companies face high expectations, leaving little room for disappointment, especially given the recent volatility in the tech market where investors have questioned whether massive AI spending will translate into commensurate returns. According to Fred Neumann, chief Asia economist at HSBC, investor expectations for AI earnings have become "increasingly lofty," making the sector vulnerable to even minor adjustments in projections.
