Asian stocks rise as tech rally and rate-hike bets lift dollar

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Asian stocks rise on tech rally

Highlights

MSCI's Asia-Pacific ex-Japan index rises over 1% as South Korea gains nearly 2% and Taiwan climbs 1.3%, driven by AI-related stocks.
Brent crude stabilizes at $100.22 after a 3% drop, while Trump's willingness to meet Iran's president boosts risk appetite and lowers bond yields.
The yen trades at 157.39 per U.S. dollar after BOJ's rate hike to a 31-year high lacks hawkish guidance, while Fed's hawkish stance pushes traders to price a 56% probability of an October rate increase.

Market drivers lift regional equities

As reported by Reuters, technology stocks lead Asian markets higher on Tuesday as easing crude prices, optimism over U.S.-Iran contacts and expectations for the Trump-Xi meeting improve sentiment across the region.

MSCI's broadest index of Asia-Pacific shares outside Japan rises more than 1% in early trading, with South Korean stocks up nearly 2% and Taiwan shares 1.3% higher. Japan's markets are closed for a holiday, while China's blue-chip index gains 0.75% and Hong Kong's Hang Seng index adds 0.4%, supported by sharp advances in AI-related stocks.

Brent crude steadies at $100.22 a barrel after falling more than 3% in the previous session and briefly slipping below the $100 mark. President Trump says he is open to meeting Iranian President Masoud Pezeshkian, who is expected in New York this week for the UN General Assembly, a development that helps push bond yields lower and supports broader market risk appetite.

Nasdaq futures rise 0.37% and European futures gain 0.3%, with investor enthusiasm also tied to the strong reception for Meta's Muse AI assistant. Analysts say the launch reinforces expectations for wider use of persistent AI agents and stronger demand linked to computing infrastructure.

Central bank outlook supports dollar

At the same time, investors are contending with a fresh wave of rate hikes and hawkish signals from major central banks, reinforcing expectations of further policy tightening later this year. That shift supports the dollar and adds pressure on the yen.

The yen trades at 157.39 per U.S. dollar, close to a three-week low after giving up gains seen earlier this month on expectations of faster Bank of Japan tightening. The BOJ raises rates last week to a 31-year high, but two dissenting votes and the absence of explicit hawkish guidance disappoint investors and renew concern about possible currency intervention.

By contrast, the Federal Reserve raises rates last week and signals that its fight against inflation is not over, keeping open the possibility of further tightening. The dollar index stands at 100.4, just below a seven-week high, while traders price a 56% chance of an October hike, up from 43.5% a week earlier, according to the CME FedWatch tool.

In our earlier article on the AI-driven chip-stock rally, we described how renewed enthusiasm for artificial intelligence powered a broad risk-on move in global equities, with tech and semiconductor names leading gains and the Nasdaq pushing toward record highs. We also noted that a sharp drop in oil prices added to the upbeat mood, while markets digested cross-asset shifts including a firmer dollar and moves in dollar/yen.

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