Asian stocks rebound

Picture Credit: Reuters

Asian equities staged a broad recovery on Thursday, rebounding from the previous session’s selloff as investors drew some reassurance from President Donald Trump’s suggestion that renewed fighting with Iran may not develop into a prolonged conflict. MSCI’s Asia-Pacific equity gauge rose 1.1%, while oil prices eased after a three-day rally. The shift offered some relief to markets that had been rattled by fears that an extended Middle East conflict could push energy prices higher and reignite inflation.

Technology stocks were among the biggest beneficiaries. Semiconductor shares including Renesas Electronics and SK Hynix advanced after Broadcom delivered a bullish outlook for AI-related chip demand. The company raised its forecast for AI chip revenue to about $115 billion in fiscal 2027 and said that figure could double to $230 billion by 2028, reinforcing expectations that spending on AI infrastructure remains strong despite growing concerns about the huge cost of building data centers.

Currency markets, however, remained unsettled. The yen strengthened sharply to around ¥157.63 against the dollar, prompting renewed speculation that Japanese authorities could intervene to support the currency. Expectations of a more hawkish Bank of Japan have also increased after comments from a board member suggested the possibility of larger or back-to-back rate increases. Markets are now pricing a strong probability of a standard 25-basis-point hike at the bank’s September meeting, while a 50-basis-point move remains unlikely.

Oil prices provided another source of relief for investors. Brent crude slipped to roughly $95 a barrel after Trump indicated that further US attacks on Iran could be relatively short-lived and reiterated his claim that the United States controls the Strait of Hormuz. The retreat in crude prices helped ease some of the pressure that had driven global bond yields higher earlier in the week, although the 10-year US Treasury yield remained elevated at around 4.77%.

The broader market mood remains cautious. Investors are still dealing with unresolved geopolitical tensions, elevated bond yields and uncertainty over the direction of US monetary policy. With corporate earnings largely behind them, attention is now turning to the upcoming US jobs report, which could provide the next major signal for interest-rate expectations. Thursday’s rebound therefore represents less a return to calm than a temporary reprieve, with markets still highly sensitive to developments in Iran, oil and central-bank policy.