Asian stocks rose as traders trimmed bets on a Federal Reserve interest rate hike after US inflation data came in lower than expected, while AI bets gained fresh momentum.

The MSCI Asia Pacific index rose 1.8%, with technology stocks among the biggest gainers, while South Korea's Kospi jumped 7%, reclaiming its position as the best-performing major stock index in the world this year. SK Hynix shares surged 11% after the company's US depositary receipts soared 27%.

Bonds stabilized after their rally led to a sharp drop in yields on Tuesday, with traders backing away from bets that the Fed would begin raising rates early this month. Sovereign bonds in Japan and Australia also rose.

However, caution prevailed after oil rose for a third day following US threats of further strikes on Iran. Earlier, Washington reinstated its blockade on Tehran's shipments through the Strait of Hormuz.

Wed, 01 2026

US data revives AI bets

Weak US inflation figures on Tuesday and the strong start to the earnings season revived AI bets, boosting tech stocks after a recent wave of volatility.

While the data gives the Fed more room to keep interest rates unchanged, escalating tensions in the Middle East continue to impact inflation expectations through the threat of higher energy prices.

Tiffany Wilding, an analyst at Pacific Investment Management, said: 'The weaker-than-expected CPI is a huge relief,' adding, 'While the report won't completely eliminate the debate over further tightening, it should effectively rule out a rate hike in July.'

Garfield Reynolds, chief of Bloomberg Markets Live, said: 'Fuel futures are significantly higher than crude oil ones, indicating that investors are showing some complacency in pricing in the possibility that energy supply shocks will recede quickly this year, especially given the recent escalation in the US-Iran conflict.' Adding, 'This is a dynamic that will haunt equities, credit, and bonds, given how willing investors are to bet that the impact of wars in the Middle East and Europe will be temporary.'

Mon, 15 2026

Eyes turn to chip sector

Attention in Asia will focus again on the chip sector after a volatile session on Tuesday, when the Kospi swung between gains of 2.5% and losses of up to 5.3%.

With improving sentiment, SK Hynix shares listed in the US surged, pushing the premium of the company's American depositary receipts over its Seoul-listed shares to more than 50% just three days after trading began. An Asian semiconductor stock index rose 2.9% on Wednesday.

Kazuhiro Sasaki, head of research at Phillip Securities Japan, said: 'Volatility has subsided and we are seeing some buying back in the chip sector.' Adding, 'But instead of a full return to tech, we see continued rotation between sectors, and banks look attractive, especially after strong earnings in the US.'