US Tech Earnings Lift Asian Chip Stocks; Oil Hits Six-Week High
Alina Collins
Alphabet and Tesla signaled no slowdown in AI spending, driving Asia chip stocks broadly higher — KOSPI surged over 3% — but a Middle East escalation pushed oil to a six-week high, setting inflation fears on a collision course with the tech rally.
AI spending hasn't slowed — who gets the orders first?
Alphabet raised its full-year capex guidance to $195 billion–$205 billion. Markets expect a large share to flow into the Asian chip supply chain.
This means → Korean and Japanese chipmakers are the most direct beneficiaries: SK Hynix and Samsung Electronics led KOSPI up more than 3%; the Nikkei 225 gained roughly 1%.
In plain terms = US tech giants spend on AI, and Asian chip companies are first in line to collect the cash.
"AI is moving from building roads to opening shops" — what does that mean?
Allspring portfolio manager Gary Tan said accelerating cloud growth is validating higher AI capex.
He noted: "AI is rapidly moving from an infrastructure-building phase to a disruptive-application phase. Hyperscalers are increasingly using AI to challenge incumbents in search and e-commerce."
This means → the market's focus is shifting — from "how much was spent building data centers" to "can that spending generate new revenue streams."
Why is oil suddenly a problem?
Brent crude rose 2% in early trade to $96 a barrel, hitting a six-week high.
The trigger: the US launched a fresh round of strikes on Iran, and Yemen's Houthi forces attacked a Red Sea tanker. Analysts warn that a simultaneous closure of the Strait of Hormuz and the Bab el-Mandeb Strait would disrupt more than a quarter of global oil and gas shipments.
This reflects a shift — geopolitical risk is no longer just a headline; it is transmitting through oil prices into interest rates and equities.
Oil is up — how does that move rates?
Rising oil pushed US short-term Treasury yields to a 17-week high, as markets bet the Fed may bring forward rate hikes.
Traders now price in 42 basis points of hikes this year; a September hike is fully priced in.
In plain terms = oil gets expensive → inflation pressure returns → the Fed may act sooner → borrowing costs rise, and stocks feel the squeeze.
The yen is near a forty-year low — why can't it bounce?
The yen traded at 163.1 per dollar, after touching 163.23 — the weakest since December 1986. Repeated verbal warnings from Japan's Ministry of Finance have failed to spark a meaningful rebound.
OCBC strategists noted that FX intervention or the Government Pension Investment Fund (GPIF) buying domestic assets can briefly slow the slide but cannot change the yen's fundamental role as a funding currency — a currency others borrow to invest in higher-yielding assets.
This means → a real reversal may require the Bank of Japan to accelerate rate hikes — and that signal is absent.
Earnings tailwind vs. geopolitical headwind — how does the market choose?
ATFX chief market strategist Nick Twidale said the tug-of-war between strong tech earnings and an escalating Middle East will keep markets cautious.
The FTSE Asia-Pacific ex-Japan index rose about 1% in early trade, on track for a weekly gain of roughly 3%, snapping a two-week losing streak.
The key question this earnings season: can massive AI spending translate into real profit growth, and can stretched valuations hold up?
Content is for reference only, not financial advice.