Asian stock indices gained on Thursday led by a rebound in AI-linked technology shares, even as Brent crude prices surged past USD 96 per barrel. The rise in energy costs has triggered inflation worries, potentially complicating future monetary policy for global central banks.
Detailed Coverage
Asian stock markets showed strength on Thursday, primarily supported by a recovery in artificial intelligence-related technology stocks. This optimism persists despite rising geopolitical tensions in the Middle East, which have pushed Brent crude oil prices to USD 96.14 per barrel, a level not seen since early June. Investors are currently weighing the growth potential of tech-focused companies against the macroeconomic risks posed by expensive energy.
South Korea’s Kospi index led the regional rally, rising 3.7 per cent to 7,028.66, driven by strong gains in key technology firms such as Samsung Electronics and SK Hynix. In Japan, the Nikkei 225 climbed 0.5 per cent to 66,461.62, aided by a 3.3 per cent increase in SoftBank Group shares. Meanwhile, the Hang Seng index in Hong Kong advanced 1.3 per cent to 25,227.06.
Not all markets followed this positive trend. India’s Sensex recorded a modest decline of 0.3 per cent, while the Shanghai Composite in mainland China edged lower by 0.2 per cent to 3,859.69. The Taiex in Taiwan saw a steeper correction, falling 1 per cent. In the US, market sentiment remains cautious; while companies like Alphabet reported higher-than-expected earnings, shares were under pressure as investors scrutinized the heavy capital spending required for AI development. Similarly, Tesla faced downward pressure as rising research and development costs weighed on its recent profit margins.
The energy sector remains a focal point for global investors. The surge in oil prices is largely tied to disruptions in the Strait of Hormuz, a critical maritime passage for energy supply. Higher oil prices can act as a hidden tax on the broader economy, increasing operational costs for businesses and potentially reducing disposable income for consumers. This creates a difficult environment for central banks, as persistent energy-driven inflation may limit their ability to cut interest rates. The yield on the 10-year US Treasury note rose to 4.65 per cent, reflecting market expectations that interest rates might need to remain elevated for a longer period to combat inflationary pressures.
For investors, the primary monitorable in the coming weeks will be how sustained energy costs impact corporate profitability in the next quarterly results. Additionally, tracking the volatility in AI-linked stocks will be essential to determine if the current rebound is based on long-term earnings potential or short-term momentum, particularly as companies continue to balance aggressive expansion in new technology with the need to maintain healthy profit margins.