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

Asian markets experienced a surge on Monday, propelled by a significant rally in technology shares driven by growing demand for artificial intelligence. This bullish momentum benefitted chipmakers, while optimistic forecasts for the Federal Reserve's interest rate stance kept investors on edge. The positive outlook followed a mixed day on Wall Street, where most U.S. stocks declined after August jobs data surpassed expectations, signaling a potentially hawkish Fed.

As U.S. markets closed for Labor Day, futures on U.S. stock indices traded with reduced liquidity. Nasdaq 100 futures rose 0.3%, while S&P 500 futures stayed flat. The robust jobs report bolstered the global growth outlook but also limited the Federal Reserve's flexibility to ease policy, emphasizing the importance of Friday's U.S. consumer price report in determining the September rate decision.

With Treasury yields on the rise, financial conditions remained tight. Chip manufacturers experienced a notable surge as optimism around AI boosted the supply chain. The MSCI Asia Pacific index climbed 1.1%, while the broader index excluding Japan gained around 0.9%. South Korea's KOSPI surged 3.4%, and Japan's Nikkei 225 increased by 1.9%.

South Korean stocks led the gains, with SK Hynix rising 6.1% and Samsung Electronics climbing 4%. The rally followed a strong performance in U.S. chip stocks following OpenAI's unveiling of GPT-6 Astra, reigniting optimism about AI infrastructure demand. Japanese semiconductor companies also saw gains, with Kioxia jumping 7.6%, TDK up 2.5%, and Murata Manufacturing rising 4.3%.

However, not all stocks followed the trend, as Largan fell 9.5% and Sony declined 2.6%. Foxconn maintained stability despite announcing future operations expected to exceed market projections, driven by strong AI demand and peak-season information and communications technology sales. August revenue for Foxconn reached a record T$921.8 billion, marking its second consecutive month above T$900 billion.

Oil prices added to inflation concerns after the U.S. targeted three Iranian oil tankers following attacks on U.S. Navy ships, prompting Iran to threaten the establishment of a restricted zone outside the Strait of Hormuz. This heightened the risk of further disruption to energy flows, with Brent crude rising 0.2% to $96.45 a barrel and West Texas Intermediate crude gaining 0.4% to $91.85.

Chinese and Indian markets showed mixed results on Monday, as policy support continued to build. China's CSI 300 index gained 0.2%, while Hong Kong's Hang Seng fell 1.2%. Chinese technology shares were mixed, with Xiaomi declining 3.9%, Baidu dropping 5.6%, JD.com falling 1.5%, Meituan slipping 1.9%, and Tencent remaining stable at 0.8%.

Meanwhile, MiniMax rose 4.9%, and some hardware stocks gained. Beijing announced a 360 billion yuan recapitalization of state-owned banks and insurers, including 300 billion yuan in special Treasury bonds, to stabilize the financial system and support lending amid slowing growth. In India, the Nifty 50 index inched up by 0.1%, while GIFT Nifty futures indicated a modestly positive start following four successive weekly declines.

Investors are also observing new pre-open session rules that bring the mechanism closer to the closing auction session, causing sharp fluctuations in the Sensex close. Other Asian markets followed suit: the S&P/ASX 200 rose 0.11%, Singapore's Straits Times fell 0.2%, Thailand's SET index increased by 1.1%, the Philippines' PSEi declined 0.31%, Malaysia's KLCI gained 0.32%, New Zealand's NZX 50 dropped 0.5%, and Japan's TOPIX rose 0.6%.