Asian stocks rally as chipmakers surge, oil and Fed bets keep risks in view

Asian equities rallied on Monday, propelled by a robust performance in chip manufacturers and heightened expectations around artificial intelligence. Technology stocks benefited from renewed optimism surrounding AI, while elevated oil prices and solid U.S. jobs data kept concerns about potential interest rate hikes in the spotlight. Wall Street experiences a holiday on Monday, with U.S. stock-index futures trading on a reduced schedule. The Nasdaq 100 and S&P 500 futures remained relatively stable in early Asian trading.

Positive job figures out of the United States supported global growth prospects but limited the Federal Reserve's capacity to ease policy, leaving the focus on the upcoming U.S. consumer price report, which could influence the September rate decision. The MSCI Asia Pacific index climbed 1.1%, while the broader index excluding Japan gained approximately 0.9%.

South Korea's KOSPI surged 3.4%, and Japan's Nikkei 225 increased 1.9%. SK Hynix and Samsung Electronics led the gains in South Korea, with SK Hynix surging 6.1% and Samsung Electronics rising 4%. The rally followed a strong performance in U.S. chip stocks following OpenAI's announcement of GPT-6 Astra, rekindling expectations around AI infrastructure demand.

Japanese tech stocks also experienced notable gains, with Kioxia surging 7.6%, TDK rising 2.5%, and Murata Manufacturing advancing 4.3%. Meanwhile, Largan fell 9.5%, and Sony experienced a 2.6% drop. Foxconn remained flat despite anticipating third-quarter operations to outperform expectations, driven by robust AI demand and peak-season information and communications technology sales. August revenue for Foxconn climbed 52% year-on-year, marking its second consecutive month above T$900 billion.

Oil prices added to inflationary pressures after the U.S. intervened to seize three Iranian oil tankers following attacks on U.S. Navy ships. Iran has threatened to establish a restricted zone outside the Strait of Hormuz, raising concerns about potential disruptions to energy flows. Brent crude rose 0.2% to $96.45 a barrel, while West Texas Intermediate crude increased 0.4% to $91.85.

China's CSI 300 index gained 0.2%, while Hong Kong's Hang Seng fell 1.2%. Chinese technology shares were mixed, with Xiaomi down 3.9%, Baidu dropping 5.6%, JD.com declining 1.5%, Meituan falling 1.9%, and Tencent experiencing a 0.8% decrease. MiniMax rose 4.9%, and several hardware names gained value. On the macroeconomic front, Beijing announced a 360 billion yuan recapitalization of state-owned banks and insurers, including 300 billion yuan in special Treasury bonds, aimed at strengthening the financial system and supporting lending amid a slowdown in growth.

Investors are also closely monitoring new pre-open session rules that bring trading closer to the closing auction session, which has led to significant fluctuations in the Sensex close.