Asia shares edge up as chip selloff eases; US CPI awaited

Asia's stock markets experienced a slight rise on Wednesday, as tensions surrounding the artificial intelligence (AI) sector eased following a recent sell-off. However, gains were dampened by surging oil prices and market uncertainty ahead of the United States inflation data. Within the AI supply chain, chip manufacturers like Samsung Electronics and SK Hynix in South Korea, as well as Kioxia in Japan, saw gains of over 2 percent each.

The MSCI's broadest Asia-Pacific index outside Japan rose by 0.5 percent, following a mild decline in US stocks from the previous session.

Despite the overall positive sentiment, market participants remained cautious due to elevated oil prices, which heightened concerns over energy supply following Houthi missile and drone attacks on Saudi Arabia. Oil prices climbed, with US crude increasing by 0.8 percent to $94.96 a barrel and Brent crude reaching $106.6. Analyst Kyle Rodda from Capital.com noted that market participants will be observing whether the volatility across major indices subsides.

Additionally, longer-dated bonds gained as investors sought safety, with the yield on the benchmark 10-year Treasury note remaining steady at 5.221 percent, while that on 30-year notes held at 5.569 percent. On Wall Street overnight, US bank stocks faced losses after mixed quarterly earnings from Citigroup and its peers.

While awaiting US inflation data, market participants were keen to gauge insights into the Federal Reserve's interest-rate outlook. Economists estimated that headline inflation would accelerate to an annual 3.6 percent in September, primarily due to rising energy prices, with core CPI increasing by 0.2 percent on a monthly basis. Currency strategist Carol Kong from Commonwealth Bank of Australia predicted a 22 percent chance of an October Fed rate hike, given expectations of stronger consumer demand and higher costs.

New York Federal Reserve President John Williams indicated that the Fed might need to raise its policy rate more than once this year to curb inflation but highlighted no immediate need for hikes in 2027. The dollar index, which tracks the greenback against major trading partners, was at 102.17, while the euro remained stable at $1.1202. Market participants were also waiting for Chinese inflation data to assess the revival of domestic demand amidst deflationary pressures.