Tech leads shares higher in Asia, oil eases

Share markets in Asia rose modestly on Monday, driven by strong demand for artificial intelligence and the possibility of increased oil supplies from Saudi Arabia. The attacks on Saudi Arabia by Houthi rebels had a negative impact on oil prices, but the news of potential supply increases helped to offset the negative effects. Investors were cautious due to the Bank of Japan's potential intervention to support the currency.

Japan's Nikkei index remained closed for the Silver Week holiday, but futures were up 0.5%. South Korea's tech-heavy index gained 1.1%, and the MSCI Asia-Pacific index outside Japan rose 0.3%. The S&P 500 and Nasdaq futures both increased by 0.3% and 0.4% respectively. In Europe, the EUROSTOXX 50 futures and DAX futures both rose by 0.2%, while the FTSE futures remained unchanged.

Bond markets experienced heightened uncertainty after a sharp decline in US 2-year yields to the highest since mid-2024. Federal Reserve officials had indicated a 56% probability of a further rate hike in October, with a year-end hike considered likely. The Federal Reserve's tightening cycle is typically aggressive, and the likelihood of additional rate hikes this year appears high.

The European Central Bank, the Bank of England, and the Bank of Japan are expected to continue tightening monetary policy by the end of the year. Oil prices were above $100 per barrel, with Brent Crude at $103.68 per barrel and US crude at $100.02 per barrel. The attacks on Saudi Arabia and the resulting pipeline closure have raised concerns about potential disruptions to global oil supplies.