Asian stocks advanced on Monday, led by technology shares, after a rally in US information technology companies strengthened optimism around demand for artificial intelligence computing infrastructure.
The MSCI Asia Pacific Index rose 1.3 per cent, with South Korean chipmakers SK Hynix and Samsung Electronics among the biggest contributors to the gains.
The advance followed a 0.2 per cent increase in the Nasdaq 100 Index on Wall Street and a 3.4 per cent jump in the Philadelphia Semiconductor Index.
Investors were encouraged by expectations that stronger demand for artificial intelligence systems would support chipmakers, server manufacturers and other technology suppliers.
AI demand supports chipmakers
The technology rally was partly linked to optimism surrounding a new artificial intelligence model from OpenAI.
Investors expect advances in AI models to increase demand for high-performance processors, memory chips, networking equipment and data centre infrastructure.
That expectation has supported the share prices of companies involved in the global semiconductor supply chain.
Kim Namho, a fund manager at Timefolio Investment Management in Seoul, said optimism around the new OpenAI model had helped drive gains in South Korean chipmakers.
The AI investment cycle has become a major market theme as technology companies and cloud-service providers continue to commit billions of dollars to computing infrastructure.
However, investors remain focused on whether the spending will translate into sustainable revenue and profits for the companies involved.
Oil prices rise
Oil prices also climbed as renewed attacks involving US and Iranian vessels heightened concerns about possible disruptions to crude supplies through the Strait of Hormuz.
The waterway is a major transit route for global energy shipments, with a significant share of the world’s oil supply passing through it.
Any prolonged disruption could increase transportation costs, delay deliveries and tighten global crude markets.
The rise in oil prices added to market uncertainty as investors assessed the potential impact of the conflict on inflation, energy costs and economic growth.
Higher oil prices can support energy companies but may place pressure on consumers and businesses by increasing transportation and production costs.
Currency and bond markets
In other markets, the yen edged higher, while Treasury 10-year futures declined for a second consecutive day.
Cash Treasury trading was closed globally on Monday because of a US public holiday.
The movement in currencies and government bonds reflected broader adjustments in expectations around interest rates, inflation and economic growth.
Investors are monitoring whether stronger technology-sector activity and higher energy prices could influence central bank policy in major economies.
The combination of rising technology shares and higher oil prices presents a mixed outlook for markets.
Technology companies may benefit from increased AI spending, while energy producers could gain from higher crude prices.
However, sustained increases in oil prices could raise inflationary pressures and complicate efforts by central banks to reduce borrowing costs.
Markets remain sensitive to geopolitical risks
The latest gains in Asian equities came despite continuing concerns about geopolitical instability and its impact on global supply chains.
Investors are also assessing the sustainability of the AI-driven technology rally after significant gains in semiconductor and related stocks.
The performance of chipmakers remains closely linked to expectations for AI infrastructure spending, but any slowdown in technology investment could affect the sector’s valuation.
For now, optimism over AI demand and strong technology-sector momentum are supporting Asian equities, while developments around the Strait of Hormuz remain a key factor for energy markets.
