Markets Briefing: Chips Lift Asia as Oil Climbs and the Yen Sinks to a Four-Decade Low
A revival in the artificial-intelligence trade drove a global rally in chip stocks, lifting Asian equities even as climbing oil prices and a slide in the yen kept macro risks firmly in view (BBG). South Korea's Kospi, a bellwether for AI investment, jumped 2.56 per cent as the unwinding of leveraged bets that had dragged the benchmark far below its peak appeared to be nearing an end, with Samsung Electronics and SK Hynix leading (Livemint). The advance followed a sharp rebound in US semiconductors, which clawed back out of bear-market territory as investors awaited Alphabet's guidance on AI spending. Even so, caution prevailed before the earnings test. "The burden of proof has changed," said Bret Kenwell of eToro. "Investors want growth and guidance strong enough to justify elevated valuations." (BBG)
The tone across Asia was split. The Nikkei 225 held a slim gain of 0.14 per cent, and China's CSI 300 rose 0.12 per cent, the latter buoyed as Beijing reaffirmed its growth target and a broad state-backed rescue drew record inflows into technology funds, while Hong Kong's Hang Seng fell 1.02 per cent and India's Nifty 50 lost 0.67 per cent (BBG). US index futures pointed lower, with the Micro E-mini S&P 500 easing 0.13 per cent and the Nasdaq-100 contract down 0.46 per cent, and European futures were mixed to firmer.
Central-bank expectations tilted a shade more hawkish overnight. A Reuters poll found the Federal Reserve is expected to hold its key rate for the rest of 2026, but a majority now describe the odds of a hike this year as high, a reversal from last month when most saw them as low, as the oil-driven pickup in inflation reshapes the outlook (Reuters). The Bank of Japan, which raised rates last month to their highest since 1995, meets next week, with the weak yen adding to price pressure (BBG).
In currencies, the yen was the story. Having slid past 163 per dollar for the first time since 1986, it steadied around 163.17 in Asian trade, testing Tokyo's resolve after Finance Minister Satsuki Katayama warned that Japan would take decisive action in the currency market if needed (Nikkei) (Channelnewsasia). The dollar held a firm tone, with the US Dollar Index around 101.14 and the euro little changed near 1.14.
Government bonds drew a bid at the long end even as yields ground higher. Japan's 40-year auction produced a bid-to-cover ratio of 2.82, the strongest demand since early last year, and insurers kept buying super-long paper, though strategists warned that persistent yen weakness leaves the market exposed to a negative feedback loop with the currency (BBG). The 10-year JGB yield rose about 2.2 basis points to 2.743 per cent. US Treasuries held Tuesday's losses that had pushed yields to two-month highs, the 10-year around 4.63 per cent, as the oil surge rekindled inflation concerns.
Crude extended its climb, with WTI up 1.27 per cent, after President Trump played down the prospect of immediate talks with Iran and Houthi threats forced three Saudi crude tankers to reverse course in the Red Sea, disrupting a critical energy chokepoint (Bgov) (Reuters). Gold rose 1.17 per cent and silver 1.35 per cent to near two-week highs as haven demand and steady central-bank buying outweighed the firmer-yield backdrop. Copper slipped 0.58 per cent on a stronger dollar, natural gas edged up 0.31 per cent, and Bitcoin eased 0.67 per cent in a selective risk session.
On the data front, Japan's June trade report dominated. The deficit widened to ¥406.9 billion, far beyond the ¥120.0 billion consensus, as imports jumped 25.4 per cent to a record on the oil surge while exports beat at 19.3 per cent. The seasonally adjusted balance blew out to a ¥0.88 trillion shortfall, underscoring how dear energy and a weak yen are straining Japan's external accounts a week before the Bank of Japan meets (Straits Times). Australia's Westpac-Melbourne Institute leading index steadied at 0.0 per cent.
The corporate tape reinforced the AI-hardware story. Super Micro Computer rose about 15 per cent in extended trade after its order backlog hit a record above sixty billion dollars, SpaceX set the stage for one of the largest share unlocks on record next month, TSMC was reported to plan chipmaking price rises of up to a tenth from 2027, and Nvidia detailed its next-generation Vera data-centre processor (BBG) (CNBC). Cathay Pacific guided to a jump in first-half income.
Looking ahead, UK inflation headlines the European morning at 08:00 CET. You can find the full preview here. The immediate focus, though, falls on earnings from Alphabet and Tesla, where lofty expectations leave little room for disappointment, and the read on AI spending could set the market's next direction.
Time Stamp: 22 July 2026, 07:27 CET