Nikkei rises but gains checked ahead of ASML earnings, Kospi surges
The softer US inflation print is doing double duty across the region, lifting broad risk appetite by lowering July Fed hike expectations while also amplifying an already strong AI chip rally that is disproportionately benefiting Korean and Japanese semiconductor names. Korea’s move was forceful enough to trigger a trading halt, underscoring how concentrated the AI-linked rally has become in a handful of heavyweight stocks. Japan’s more measured gain, and the pullback from its earlier intraday high, shows some of that enthusiasm being tempered by caution ahead of ASML’s results, a reminder that the chip rally’s durability still hinges on confirmation from the sector’s key suppliers. Oil’s continued advance on the Iran blockade and fresh strikes is running in parallel rather than in tension with the equity rally, reflecting how separately markets are currently pricing geopolitical risk and the softer domestic US inflation outlook.
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Cooler US inflation lifted Asian stocks and chip names, while oil kept climbing on Iran.
Summary:
- Asian stocks rose Wednesday as a softer-than-expected June US inflation report lowered expectations for a July Federal Reserve rate hike
- South Korea’s Kospi surged more than 5.0%, prompting the Korean exchange to briefly suspend trading in the index’s stocks
- The Kospi was recently up 5.6%, with SK Hynix shares rising 11% and Samsung Electronics shares rising 6.84%
- Oil prices extended gains after the US resumed its naval blockade of Iranian ports and completed a fresh round of strikes against Iran
- Japan’s Nikkei rose 0.58% after climbing as much as 1.5% earlier in the session, while the broader Topix added 0.21%
- The US semiconductor index rose 2.54% overnight, a closely watched barometer for Japanese and Korean chip-related shares
- Investors turned cautious in Tokyo trading ahead of quarterly earnings from ASML, the largest supplier of equipment used to manufacture AI chips
Asian stocks rose broadly on Wednesday as a softer-than-expected June US inflation report lowered expectations for a July Federal Reserve rate hike, extending a risk-on tone that had already lifted major US indexes overnight, according to Reuters. Equities across the region tracked those overnight gains, with the move most pronounced in markets heavily exposed to AI-linked semiconductor stocks.
South Korea’s Kospi surged more than 5.0%, a move forceful enough to prompt the Korean exchange to briefly suspend trading in the index’s stocks. The benchmark was recently up 5.6%, buoyed by heavyweight chipmakers SK Hynix and Samsung Electronics, whose shares rose 11% and 6.84% respectively. The rally in Korean chip names mirrored a 2.54% overnight advance in the US semiconductor index, which serves as a closely watched barometer for chip-related shares across the region.
Japan’s Nikkei also traded higher, tracking the same overnight Wall Street strength, though its advance was more measured. The index was up 0.58% after rising as much as 1.5% earlier in the session, while the broader Topix added 0.21%. The pullback from the day’s high came as investors grew cautious ahead of quarterly earnings from ASML, the Netherlands-based company that is the largest supplier of equipment used to manufacture AI chips. One strategist noted that while US shares had been strong overnight, the market was now waiting cautiously for the outcome of ASML’s results, which are being watched both for signs of continued AI-related demand and for how the company plans to address US restrictions on exports to China.
Oil prices moved in a separate but parallel direction, extending gains a little after the United States resumed its naval blockade of Iranian ports and completed a fresh round of strikes against Iran. The combination of a softer domestic US inflation outlook lifting equities, and escalating Middle East tensions lifting crude, left markets pricing two largely distinct dynamics simultaneously, with the AI-linked chip rally continuing to run alongside a rising geopolitical risk premium in energy markets rather than being dampened by it.
This article was written by Eamonn Sheridan at investinglive.com.