Asia-Pacific stocks rebound 2% as chip rally offsets oil surge

Asia-Pacific equities rebounded Thursday as a semiconductor-led rally offset renewed geopolitical risk from US-Iran hostilities and surging crude oil prices.

South Korea's Kospi jumped 3.8% and Japan's Nikkei 225 climbed 2.3% as chip stocks rebounded and Brent crude topped $79 a barrel.

"Despite Middle East concerns, the market doesn't see this as a time to fully exit equities," said Takashi Ito, senior strategist at Nomura Securities. "The mainstream logic is that investors can continue holding AI and chip stocks given their long-term return expectations."

The Kospi's session was a study in volatility: it opened 3.3% higher, surged as much as 4%, collapsed to just 0.2%, then rebounded to close near session highs. Samsung Electronics gained 3.6% and SK Hynix surged 7.5% on bargain buying after the recent correction in chipmakers. MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.8%.

The rally's staying power remains unproven. Bloomberg strategist Mark Cranfield noted traders will watch whether volume exceeds the average and whether the close holds gains to confirm a bullish turning point. The next catalyst for regional markets comes Friday with US producer price data, which will shape expectations for the Federal Reserve's next move.

Oil Surge and the Fed Repricing

Brent crude extended its weekly gain to about 9%, trading above $79 a barrel, after the US launched a second round of military strikes on Iran. The US Central Command said the strikes were intended to "further degrade Iran's ability to threaten freedom of navigation through the Strait of Hormuz." West Texas Intermediate hovered near $75.

The oil rally reignited inflation fears. Money markets on Wednesday pulled forward their expected timing of the next Federal Reserve rate hike to October from December. The 2-year US Treasury yield rose 5 basis points to 4.23%, while the 10-year yield climbed 4 basis points to its highest level since late May. Fed minutes from the June 17 meeting showed some officials saw a case for raising rates, though the committee ultimately held steady.

"The collapse of the US-Iran ceasefire risks triggering a new round of inflation acceleration, which could force the Fed to hike," said Ed Yardeni, a veteran strategist.

Chip Stocks Steal the Show

The semiconductor rebound was the day's dominant narrative. SK Hynix's US IPO drew oversubscription of more than 7 times, far exceeding expectations, sending its Seoul-listed shares up 6.6% with an intraday peak of 9%. The strong demand signals that investor appetite for AI-related chip stocks remains robust despite the recent selloff.

In Tokyo, Kioxia Holdings surged 10% after Bain Capital fully exited its stake in the flash-memory chipmaker. The stock has gained more than 650% year to date. Nomura's Ito said the chip trade remains intact as long as AI demand holds up.

eToro market analyst Zavier Wong struck a more measured tone. "We've been through several rounds of escalation and de-escalation," he said. "Oil price rises are not surprising but remain far from the levels seen when the conflict first erupted."

This article is for informational purposes only and does not constitute investment advice.