Tech Stocks Lead Asia Gains; Kospi Up 4%, SK Hynix 7%, Strait Clash Lifts Oil

South Korea's KOSPI extended intraday gains to 4%, with SK Hynix up over 7% and Samsung Electronics up over 5%, contributing the most to the MSCI Asia Pacific Index's advance. Brent crude rose 1.1% to trade above $97 a barrel; West Texas Intermediate rose 1.2% to $92.53 a barrel. The yen edged higher on Monday, strengthening as much as 0.3% to 155.80 per dollar.

AI optimism boosted South Korean chip stocks, the US-Iran tanker clash pushed crude prices higher, and rising expectations of a Fed rate hike kept markets on edge.

Asian stocks broadly rose on Monday, led by the tech sector, with South Korean chip stocks particularly strong. Meanwhile, a tanker attack near the Strait of Hormuz involving the US and Iran pushed international oil prices higher. Investors, while enjoying the AI-driven tech rally, also faced pressure from rising expectations of a Fed rate hike this month.

OpenAI announced the launch of its next-generation flagship model GPT-6 last week, sparking optimism about further growth in AI computing demand and serving as the main catalyst for the rise in Asian tech stocks. South Korea's KOSPI extended intraday gains to 4%, with SK Hynix up over 7% and Samsung Electronics up over 5%, contributing the most to the MSCI Asia Pacific Index's advance.

On the oil front, the US said it struck three Iranian tankers over the weekend, destroying one, in retaliation for Iran's ballistic missile attack on a US Navy vessel. Iran immediately announced it would establish a new restricted zone outside the Strait of Hormuz, sharply escalating geopolitical tensions and adding further pressure to already elevated oil prices.

• South Korea's KOSPI extended intraday gains to 4%, with SK Hynix up over 7% and Samsung Electronics up over 5%
• The yen edged higher on Monday, strengthening as much as 0.3% to 155.80 per dollar
• Japan's 40-year government bond yield rose 7 basis points to 4.1%.
• Brent crude rose 1.1% to trade above $97 a barrel; West Texas Intermediate rose 1.2% to $92.53 a barrel.
• Spot gold fell 0.6% to $4,403.23 an ounce
• Bitcoin fell 0.2% to $79,723.42

New AI Model Ignites Chip Stock Enthusiasm

The MSCI Asia Pacific Index rose 1.3% to its highest level since June this year. Monday's gains followed strength in US tech stocks last Friday—the Nasdaq 100 closed up 0.2% on Friday, while the Philadelphia Semiconductor Index surged 3.4%.

Kim Namho, a fund manager at Timefolio Investment Management in Seoul, said the biggest driver of the rally in South Korean chip stocks was optimism from OpenAI's new model—news that had already pushed US chip stocks higher. OpenAI said the release of GPT-6 is an important milestone in the company's decade-long goal toward so-called artificial general intelligence.

Tim Waterer, chief market analyst at KCM Trade, said, "This recovery in tech stocks is keeping traders in a buying mood today. It's somewhat surprising how quickly Asian markets have digested the negative reaction in US markets to the jobs data."

Hormuz Clash Pushes Oil Above $97

Geopolitical tensions provided significant support to the oil market. Brent crude rose 1.1% to trade above $97 a barrel; West Texas Intermediate rose 1.2% to $92.53 a barrel.

According to Press TV, Iran's top security official said a new restricted zone would be announced outside the Strait of Hormuz in the coming days, extending from the US naval blockade line into parts of the Persian Gulf. The statement further heightened concerns about disruption to a key global crude oil shipping route.

Rate Hike Expectations Rise, CPI Data in Focus

Rising oil prices, combined with stronger-than-expected US nonfarm payrolls data last Friday, put the market's attention on the US August CPI data due this Friday, increasing the likelihood of a Fed rate hike in September.

Elias Haddad, global market strategist at Brown Brothers Harriman, wrote in a note to clients that whether the Fed hikes rates on September 16 "depends on the performance of the US August CPI data this Friday." He said, "If CPI runs hot, it will almost lock in a September hike and support a stronger dollar; if the data comes in cool, it will reinforce expectations of a pause and put pressure on the dollar for a dovish repricing."

Notably, due to a US public holiday, the cash bond market was closed on Monday, and 10-year US Treasury futures slipped for a second consecutive session.

Yen Strengthens, European Bonds Seen Under Pressure

The yen edged higher on Monday, strengthening as much as 0.3% to 155.80 per dollar, amid speculation that Japan's Government Pension Investment Fund (GPIF) may increase its allocation to domestic assets, while traders also weighed the possibility of a Bank of Japan rate hike this month. Meanwhile, Japan's 40-year government bond yield rose 7 basis points to 4.1%.

Abbas Keshvani, head of Asia macro strategy at RBC Capital Markets, said, "We are still digesting the aftermath of last week's GPIF news. The fund's potential asset rotation could help stabilize the Japanese government bond market and kick-start a yen recovery by next year."

European bond markets were also in focus on Monday. Germany's far-right Alternative for Germany (AfD) party achieved its best-ever result in Sunday's state election in Saxony-Anhalt, with AfD leading at 44% according to projections broadcast by ARD, more than doubling its support from the previous election, while the long-ruling Christian Democratic Union saw its vote share shrink sharply to 17.5%. The euro was little changed in early Asian trading, but the subsequent reaction in European bond markets, including German bunds, warrants continued attention.