Asian stocks climbed for a second consecutive day on Wednesday, July 22, driven by a rebound in chipmakers who are central to the artificial intelligence boom. MSCI’s Asia-Pacific equities gauge advanced by 1.5%. South Korea’s Kospi, a key indicator for AI investments, soared by 6%, as leveraged bets appeared to unwind after pushing the benchmark nearly 30% below its peak. Japan's Topix also rose 1.3%, Australia's S&P/ASX 200 advanced 0.2%, and the Shanghai Composite climbed 0.2%, while Hong Kong's Hang Seng fell 0.6%. This regional rally followed Nasdaq's strong performance, with a key semiconductor gauge jumping 5.2%.
Crude oil prices also increased, reigniting inflation concerns. Brent crude advanced 1% to over $92 a barrel, even reaching $92.50, marking its highest intraday price since June 11. This surge was attributed to renewed US-Iran tensions, as President Donald Trump indicated the United States was "not finished" attacking Iran and minimized prospects of immediate talks. Analysts like Jay Hatfield of Infrastructure Capital Management suggested oil prices could remain in the $80-$90 range but warned that a closed Red Sea could push prices over $100. This upward movement in oil prices pushed Treasury yields to their highest in two months.
On currency markets, the Japanese yen continued to weaken, falling below 163 against the dollar, reaching its lowest level since 1986. This depreciation was partly linked to rising oil prices. Investors are now keenly focused on upcoming earnings reports from major tech companies like Alphabet and Tesla, starting Wednesday. Expectations are high, leaving little room for disappointment, especially after weeks of volatility in AI-related stocks as investors questioned whether massive AI spending would translate into commensurate returns. However, some analysts view the recent correction in AI stocks as a healthy reset rather than a fundamental breakdown of the AI investment theme.
