Asian stocks rise as AI capex ramps up, oil at six-week highs

In currency markets, the Japanese yen JPY= was at 163.07 per dollar, giving up its gains from the previous session after Bloomberg News reported that Bank of Japan officials were open to raising rates at a faster pace. On Tuesday, the currency weakened to its lowest level since December 1986 at 163.24, with traders on alert for signs of intervention from Tokyo. Japan's finance minister has repeatedly issued verbal warnings but that has barely helped the yen. FRX/ "While the risk of FX intervention or stronger GPIF demand for domestic assets could help curb JPY weakness, neither is likely to fundamentally alter the JPY's role as a funding currency," said OCBC strategists. "A more durable shift towards the JPY becoming an investment currency would likely require the BOJ to accelerate the pace of rate hikes," they said. The U.S. dollar stood tall amid safe-haven flows as well as on the back of rising wagers that the Fed will increase rates soon. Traders are pricing in 42 basis points of hikes this year with a hike fully priced in for September. Asian stocks rose on Thursday after U.S. technology firms outlined significant capital spending plans that are likely to benefit chipmakers in the region, while the escalating war in the Middle East pushed oil prices to six-week highs. Earnings from Alphabet GOOGL.O and Tesla TSLA.O showed no slowdown in the vast spending on AI infrastructure, with the search giant raising its capital expenditure plans for the year. A lot of the spending is expected to boost Asian chipmakers. South Korea's KOSPI .KS11 surged more than 3%, led by SK Hynix 000660.KS and Samsung Electronics 005930.KS. Japan's Nikkei .N225 was up 0.7%. MSCI's broadest index of Asia-Pacific shares outside Japan .MISX000S0PUS gained about 1%, set for a 3% rise for the week, snapping a two-week losing streak. Much of the focus this earnings season will be on whether the huge amount of spending on AI is resulting in significant returns, the pace of profit growth and whether the sky-high valuations of some of the firms are warranted. "For markets, this is not an AI-demand problem; it is an AI-return problem," said Charu Chanana, chief investment strategist at Saxo in Singapore. "U.S. megacaps may face more scrutiny because they are writing the cheques, while chipmakers, memory suppliers and infrastructure companies get paid earlier in the investment cycle." Gary Tan, portfolio manager at Allspring Global Investments, said the key positive for Asia’s chipmakers was that stronger cloud growth was validating higher AI capex, reinforcing that the hyperscaler spending cycle still has legs. European futures STXEc1, though, pointed to a muted open ahead of a policy decision from the European Central Bank, where the central bank is expected to stand pat but keep its options open for a hike in September in the wake of the Iran crisis. Nasdaq futures NQc1 dipped 0.1% as investors' attention remains on capital spending plans ahead of earnings from Microsoft, Meta and Amazon next week. Rising oil prices have also revived inflationary worries, pushing short-term U.S. Treasury yields to the highest in 17 months as traders wager the Federal Reserve may need to raise interest rates sooner rather than later. Brent crude futures LCOc1 rose 2% to $96 per barrel after the U.S. launched a new round of strikes on Iran and Yemen's Houthis targeted oil tankers in the Red Sea, widening the scope of a conflict that has upended the global rates outlook. Thierry Wizman, global FX & rates strategist at Macquarie Group, said the rise in oil prices had renewed concern about the impact on global growth. Nearly five months of war have depleted global stockpiles and stoked inflation worldwide, with analysts warning that the closure of both the Strait of Hormuz and Bab el-Mandeb in the Red Sea would disrupt shipping routes for more than a quarter of the world's oil and gas. "The worries about global growth are well-placed, we think," said Wizman.

Asian stocks rise as AI capex ramps up, oil at six-week highs

Yen remains near 40-year lows

Asian stocks rise on AI spending plans

Markets question returns from AI capex

Oil rises as Middle East tensions widen

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