Asia Shares Soar Amid Tech Rally; Oil Drops With Strait of Hormuz Hopes
Market Movements and Economic Updates
By Wayne Cole
Asian Stock Markets Surge
SYDNEY, Aug 5 (Reuters) - Asian stock markets jumped on Wednesday as strong earnings and a resurgence of demand for tech lifted Wall Street to record peaks, while hopes for progress on opening the Strait of Hormuz dragged on oil prices and bond yields.
Japan's Nikkei climbed 3.0% and South Korea added 3.4%, continuing its run of wild swings. MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.5%.
Tech Sector Performance
Not all tech firms benefited equally though.
Investors appeared to be taking profits on AMD even as its results beat forecasts. Shares in the chipmaker sank 9% after the bell.
AI and satellite group SpaceX shed 7.5%, undoing much of a rally in regular trading time, on worries capex spending was eating up all its cash flow.
Concerns Over AI Stocks
This has been a recurring concern for all AI stocks given the vast cost of compute power, with borrowing costs for the sector continuing to rise.
"SpaceX continues to execute strongly operationally, but its ambitious investment program means additional capital will almost certainly be required over the medium to longer term," said Chris Weston, head of research at broker Pepperstone.
"How management funds that growth, and at what cost, is likely to remain a central theme for investors over the coming quarters."
Futures and Global Indices
Nasdaq futures dipped 0.1% on the earnings results, while S&P 500 futures added 0.2% after hitting all-time highs on Tuesday. EUROSTOXX 50 futures gained 0.3%, while DAX futures rose 0.5% and FTSE futures added 0.1%.
Oil Slide and Bond Market Reaction
OIL SLIDE BOOSTS BONDS
Sentiment was supported by an ongoing slide in oil prices as Qatar said mediators were making progress in efforts to end the U.S.-Iran war, though details were lacking.
Brent crude eased 0.4% to $79.02 a barrel, a long way from its July top of $102, while U.S. crude dropped 0.5% to $75.35.
The pullback in oil provided some relief from inflation fears and boosted bonds globally, with 10-year Treasury yields now at 4.6187%, down from last week's high of 4.747%.
Interest Rate Outlook
Markets also sharply pared the probability of a September rate hike from the Federal Reserve to 57% from 67%.
Fed Bank of Kansas City President Jeff Schmid, however, used a speech on Tuesday to call for tighter policy to help bring inflation back to the central bank's 2% target.
Currency and Commodity Markets
Currencies were mostly quiet, though the New Zealand dollar slipped 0.2% after data showed unemployment hit a decade peak of 5.6% in the June quarter.
The euro was flat at $1.1532, just short of its recent six-week high at $1.1559. The dollar was a shade lower on the yen at 157.53, with the threat of intervention lingering over traders.
Policy and Intervention
U.S. Treasury Secretary Scott Bessent said he was sure Bank of Japan Governor Kazuo Ueda will "do what is best" for the country's economy, which markets took as encouragement to raise interest rates further.
Japan and the United States launched a rare joint yen-buying intervention last week and vowed to take further action if needed to shore up the currency.
Gold and Commodities
In commodity markets, the drop in yields helped non-interest-paying gold edge up 0.1% to $4,080 an ounce. [GOL/]
(Reporting by Wayne Cole; Editing by Edwina Gibbs)