Asia stocks ride tech wave higher, oil stays subdued

Asian stocks experienced a sixth consecutive day of gains on Wednesday, driven by strong consumer demand for AI applications. The rally in technology stocks took center stage, while oil prices struggled amid reports of increased Middle Eastern production. Saudi Arabia restarted operations at its East-West Pipeline, potentially resuming exports from the Red Sea port of Yanbu.

US President Donald Trump claimed progress in talks with Iran in New York, but threatened to "annihilate" the country if a deal was not reached. Iranian President Masoud Pezeshkian addressed the UN General Assembly, and markets remained watchful for potential talks between the two leaders.

Brent futures declined 0.1% to $99.18 a barrel, while US crude slipped 0.4% to $90.14 a barrel. Chinese President Xi Jinping arrived in Washington later in the day, with speculation that a trade truce between China and the US might be extended, and AI cooperation sought. South Korean stocks climbed 1.2%, with Samsung and SK Hynix both rising over 2%. Taiwan's stocks rose 0.9%, nearing all-time highs. MSCI’s Asia-Pacific index outside Japan gained 0.7%, marking six consecutive days of rise.

Chinese blue chips remained unchanged, while Nikkei futures traded at 66,745, almost 2,000 points higher than Friday's close. "We expect a strong reopening in Japan tomorrow, with another move lower in crude, calm conditions in rates and Treasuries, and the Nasdaq cash and futures markets printing all-time highs," said Chris Weston, head of research at broker Pepperstone.

"Memory stocks have taken the leadership baton, backed by another strong session for semiconductors, which have recorded a sixth consecutive day of gains."

The consumer hardware sector benefited from the strong adoption of Meta's Muse agent, which topped US app download charts in the past two weeks. Analysts now await the performance of Google Labs' CC product in the market. On Wall Street, S&P 500 and Nasdaq futures maintained steady levels. In Europe, EUROSTOXX 50 and DAX futures rose 0.3%, while FTSE futures increased 0.2%.

As oil prices fell, Treasury futures showed a slight uptick, keeping 10-year yields below the 5.0% threshold. However, two-year yields hit their highest since mid-2024 at 4.7879%, reflecting investor concerns about potential further Federal Reserve tightening. Richmond Fed President Tom Barkin and Boston Fed President Susan Collins backed the recent rate hike, citing inflation worries.

Market futures suggest a 54% probability of another Fed rate hike in October and 33 basis points of tightening priced in by year-end.

A higher dollar continued its multi-week highs against the euro, sterling, and Canadian dollar, improving its technical setup. The euro hovered at $1.1440, approaching a two-month low. Trump's call to ban US diesel exports could negatively impact European inflation, as Europe heavily relies on US shipments of the fuel. Europe is currently grappling with a natural gas shortage, which could lead to higher energy prices ahead of the winter.

The dollar edged up against the yen at 157.60, with traders wary of Japanese intervention if the rate surpasses 160.00.

In commodity markets, gold declined 0.3% to $4,341 an ounce, while copper neared record highs, climbing 18% so far in 2024.