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

Asian shares edged higher on Wednesday as AI-related stocks found respite after a selloff, while the upward momentum was tempered by high oil prices and cautious sentiment ahead of US inflation data. Tech giants Samsung Electronics and SK Hynix in South Korea, as well as Kioxia in Japan, saw gains of over 2% amid a recovery from previous losses.

MSCI's Asia-Pacific index outside Japan rose 0.5%, following a mild decline in US stocks the previous day. Japan's Nikkei and South Korea's Kospi also saw slight gains of 0.2% and 1.8%, respectively. However, cautious market sentiment prevailed due to rising oil prices, which soared 0.8% to $94.96 a barrel, and concerns over energy supply after Houthi missile and drone attacks on Saudi Arabia.

Oil prices climbed to $106.6 for Brent crude. Market participants anticipate that the global indices' shaky performance may ease, but geopolitical tensions and energy market impacts continue to pose challenges. Longer-dated bonds rallied as investors sought safety, with the 10-year Treasury notes yield steady at 5.221% and 30-year notes holding at 5.569%.

On Wall Street, US bank stocks took a hit following mixed quarterly earnings from Citigroup and peers, negatively impacting broader markets. US stock futures, the S&P 500 e-minis, were up 0.04% at 7,858.8. Investors were eagerly awaiting the US consumer price index data, hoping it would offer insights into the Federal Reserve's interest-rate outlook.

Economists predicted headline inflation to have accelerated to 3.6% in September, driven by rebounding energy prices, with core CPI rising 0.2% on a monthly basis. Currency strategist Carol Kong from Commonwealth Bank of Australia warned that the core CPI might surprise upward due to strong consumer demand and higher costs, potentially pushing the market's view of an October Fed rate hike and the US dollar.

About a quarter of investors had priced in a 22% chance of an October interest rate hike before the CPI data. New York Federal Reserve President John Williams expressed a possible need for another rate increase this year to curb inflation but saw no immediate requirement for hikes in 2027. The dollar index, which measures the greenback against key trading partners' currencies, slipped to 102.17, while the euro remained flat at $1.1202.

Market participants were also awaiting Chinese inflation data, which could provide clues about domestic demand's revival amid deflationary pressures.