Asian Stocks Rally on AI Demand as Oil Prices Drop Amid Supply News
Market Movements and Key Drivers
By Wayne Cole
SYDNEY, Sept 23 (Reuters) - Asian shares were aiming for a sixth session of gains on Wednesday as consumer hunger for AI apps continued to buoy tech stocks, while oil prices fell further on reports of increased supply out of the Middle East.
Oil Supply Developments
Sources told Reuters Saudi Arabia had restarted operations at its East-West Pipeline and may have already resumed exports from the Red Sea port of Yanbu.
US President Donald Trump also claimed talks with Iran in New York had made progress, but then threatened to "annihilate" the country if a deal was not done.
Iranian President Masoud Pezeshkian addresses the UN General Assembly later on Wednesday and markets are alive to reports 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. [O/R]
International Relations and Trade
Chinese President Xi Jinping arrives in Washington later in the day amid speculation a trade truce between the two countries will be extended, and there could be cooperation over AI.
Asian Stock Performance
Renewed buzz over AI helped South Korean stocks gain 0.5%, with Samsung up over 2%, while Taiwan firmed 0.7% to near all-time peaks.
MSCI's broadest index of Asia-Pacific shares outside Japan added 0.3%, having now risen for six straight days. Chinese blue chips eased 0.5%.
Japanese markets were closed for a holiday, but Nikkei futures were trading at 66,735, almost 1,700 points above where the cash Nikkei closed on Friday.
Expert Commentary
"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 semis, which have recorded a sixth consecutive day of gains."
Consumer and Corporate AI Trends
AI Agent Adoption
CONSUMERS FALL FOR AI AGENTS
The data hardware sector has been buoyed by strong consumer take up of Meta's Muse agent, which has topped US app download charts in the past two weeks.
Analysts are now keen to see how a similar product from Google Labs known as CC will fare with consumers.
Corporate Debt and Market Demand
Also of note was demand for SoftBank's $10 billion-plus debt deal which has reportedly drawn more than $20 billion in indications of interest. That would make it one of the largest junk bond deals ever.
Global Financial Markets Overview
Stock and Bond Futures
On Wall Street, S&P 500 futures and Nasdaq futures were both a fraction firmer. In Europe, EUROSTOXX 50 futures, DAX futures and FTSE futures were all up almost 0.4%.
The dip in oil helped Treasury futures nudge higher, keeping 10-year yields below the 5.0% pain barrier.
However, two-year yields had again hit their highest since mid-2024 at 4.7879% as investors priced in the risk of more tightening from the Federal Reserve.
Federal Reserve and Interest Rates
Richmond Fed President Tom Barkin and Boston Fed President Susan Collins on Tuesday both voiced support for last week's rise in interest rates given concerns about inflation.
Futures markets imply a 54% chance the Fed will hike again in October and have 33 basis points of tightening priced in by year end.
Currency and Commodity Markets
The prospect of higher rates helped the dollar eke out multi-week highs on the euro, sterling and Canadian dollar, improving its technical background. The euro was left pinned at $1.1430 and near a two-month low.
Analysts noted a call from Trump to ban U.S. diesel exports, was potentially bad news for European inflation since the zone relied heavily on U.S. shipments of the fuel.
Europe already faces a shortage of natural gas that could push energy prices higher into the winter.
The dollar was a shade firmer on the yen at 157.60, with speculators wary of drawing more Japanese intervention on any push past 160.00.
In commodity markets, gold eased 0.3% to $4,341 an ounce, while copper neared record highs having climbed 18% so far this year. [GOL/] [MET/L]
(Reporting by Wayne Cole; Editing by Christopher Cushing)