Taiwan index rises to near all-time peak as Asian stocks ride AI wave

Asian stocks experienced a near all-time peak on Wednesday as the demand for AI applications continued to drive tech stocks, while oil prices declined further due to reports of increased supply from the Middle East. Saudi Arabia reportedly restarted operations at its East-West Pipeline, potentially resuming exports from the Red Sea port of Yanbu.

Meanwhile, US President Donald Trump claimed progress in talks with Iran in New York, but threatened to "annihilate" the country if no deal was reached. Iranian President Masoud Pezeshkian was set to address the UN General Assembly later that day, with markets speculating he might hold talks with Trump.

Brent futures slipped 0.9% to $98.37 a barrel, while US crude dropped 1.3% to $89.32 a barrel. Chinese President Xi Jinping arrived in Washington later in the day, amid speculation of a trade truce extension between China and the US, and potential cooperation over AI. South Korean stocks gained 0.5%, with Samsung leading the rise with gains over 2%. Taiwan's stocks also firmed 0.7%, nearing all-time peaks.

MSCI's Asia-Pacific index outside Japan rose 0.3%, having increased for six consecutive days. Chinese blue chips, however, eased 0.5%. Japanese markets were closed for a holiday, but Nikkei futures were trading at 66,735, nearly 1,700 points above their Friday close.

Researcher Chris Weston of broker Pepperstone anticipated a strong reopening in Japan, with another decline in crude, stable rates and Treasuries, and the Nasdaq cash and futures markets hitting all-time highs. Data hardware sector benefited from strong consumer adoption of Meta's Muse agent, which dominated US app download charts in the past two weeks. Google Labs' CC product also garnered attention.

SoftBank's $10 billion-plus debt deal reportedly attracted over $20 billion in indications of interest, making it one of the largest junk bond deals ever. On Wall Street, S&P 500 and Nasdaq futures were marginally higher. In Europe, EUROSTOXX 50, DAX, and FTSE futures all increased by almost 0.4%. The drop in oil prices helped Treasury futures rise, keeping 10-year yields below the 5.0% threshold.

However, two-year yields hit their highest since mid-2024 at 4.7879%, reflecting concerns about more Federal Reserve tightening.

Fed Presidents Tom Barkin and Susan Collins supported the recent rate hike, citing inflation concerns. Futures markets indicated a 54% chance of another Fed rate hike in October, with 33 basis points of tightening priced in by year-end. The stronger dollar reached multi-week highs against the euro, sterling, and Canadian dollar. Speculators remained cautious about potential Japanese intervention if the dollar pushed past 160.00 against the yen.

In commodities, gold eased 0.3% to $4,341 an ounce, while copper neared record highs, climbing 18% so far this year.