Tech leads shares higher in Asia, oil eases

Asian share markets saw a slight increase on Monday as the insatiable demand for data fuelled by AI benefited chipmakers, while oil prices eased due to hopes of increased Saudi Arabian oil supplies. The dollar remained stable at 157.00 yen, with investors cautious about the Bank of Japan intervening in the currency market. The yen strengthened following Japanese authorities' rate checks, while Japan's Nikkei and South Korea's tech-heavy index rose. MSCI's broad Asia-Pacific index outside Japan also gained.

In Europe, the EUROSTOXX 50 and DAX futures both increased by 0.2%, while the FTSE remained unchanged. Bond markets remained tense following a significant sell-off in US 2-year yields, which surged to a two-year high of 4.7604% after hawkish guidance from the Federal Reserve. Analysts at BofA forecasted a 56% chance of another rate hike in October, with a year-end hike considered likely.

Oil reserves were running low, prompting central banks in the EU, UK, Japan, Australia, and New Zealand to tighten monetary policies by year-end. The Swiss National Bank, Sweden's Riksbank, and Norges Bank were expected to hold steady. Bonds were also impacted by concerns over government deficits, with French debt facing increased risk premium. German debt may face pressure following poor election results for Chancellor Friedrich Merz's conservative party.

Oil prices remained above $100, driven by new threats between Iran and the US and the Houthis' attack on Riyadh. Brent's price fell by 0.2% to $103.68 a barrel, while US crude dipped 0.3% to $100.02. Reports suggested Saudi Arabia aimed to restart oil flow through its East-West pipeline after the damage from the recent attacks, but details were unclear.

This disruption could cause global oil and refined product inventories to deplete within 5 to 10 weeks, according to Vivek Dhar, head of commodities at CBA. The shortage would increase pressure on the US to reach a deal with Iran to restore oil flows and maintain the Bab el-Mandeb passage.