Asian shares mostly rise after AI leads rally on Wall Street

Asian shares saw an overall upward trend in early Thursday trading, as optimism for AI stocks and the semiconductor sector drove global market sentiment. The Japan benchmark Nikkei 225 surged 1.6%, reaching 68,609.92, while Australia’s S&P/ASX 200 fell slightly at 9,155.80. South Korea’s Kospi increased by 3.9% to 6,835.55, and Hong Kong's Hang Seng edged up by nearly 0.1%, closing at 25,453.45. Meanwhile, the Shanghai Composite gained 0.4% to 3,961.82.

The positive performance was fueled by Wall Street's overnight gains, which were just below a record high. Several AI stocks delivered better-than-expected growth for the spring, and a report indicated U.S. inflation was slightly less severe last month. The S&P 500 saw a slight gain of 0.3% for its first increase since hitting an all-time high on Friday, while the Dow Jones Industrial Average declined by 21 points, and the Nasdaq composite rose by 0.5%.

AI stocks experienced a resurgence after recovering from a period of extreme volatility. After hitting record highs, AI stocks faced pressure due to concerns about their rapid price increases. Investors sought evidence that AI investments were generating sufficient profits and productivity to maintain their value. This, in turn, could spur ongoing demand for chips and other AI-related infrastructure.

Treasury yields softened following a report showing that U.S. consumers paid 3.4% more for gasoline, groceries, and other living expenses compared to the previous year. Although this inflation rate is higher than desired, it is still less severe than the 3.5% rate observed in June. The decline in inflation could grant the Federal Reserve greater flexibility to postpone rate hikes.

Fed members remain divided over whether they should have initiated rate hikes already. However, the latest inflation data pushed traders to reduce their expectations of the Fed raising its primary interest rate at its September meeting, causing the 10-year Treasury yield to fall to 4.68% from 4.70% the previous day. Despite this decrease, the yield remains significantly higher than the 3.97% level before the Iran conflict, which triggered oil price surges and inflation fears.

In energy trading, U.S. benchmark crude oil prices fell by $1.07 to $82.20 per barrel, while Brent crude decreased by $1.01 to $87.97 per barrel.