Asian Stocks Mixed as Chip Rally Clashes With Rate and Oil Concerns

Asian stock markets showed a mixed performance on Tuesday, as a powerful rally in semiconductor shares, particularly in South Korea, was counteracted by broader investor caution amid rising oil prices and expectations for tighter monetary policy from global central banks.

Chipmakers Surge on AI Optimism

South Korea's technology sector was the region's standout performer, driving the KOSPI index up 2.3%. The rally was fueled by optimism surrounding artificial intelligence, with major chipmakers posting significant gains:

• SK Hynix Inc (KS:000660) jumped 5.7%.
• Samsung Electronics Co Ltd (KS:005930) rose 3.2%.

The positive sentiment was bolstered by data showing South Korea's economy grew 0.6% in the second quarter, surpassing expectations, largely due to strong semiconductor exports. The rally extended to other regional players, with Taiwan Semiconductor Manufacturing (TW:2330) adding 1%. However, the broader electronics supply chain saw mixed results, with firms like TDK (TYO:6762) and Sony (TYO:6758) declining.

Rate Hikes and Oil Prices Weigh on Sentiment

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Despite the tech-led gains, overall risk appetite was kept in check by several macroeconomic headwinds. Persistently firm U.S. Treasury yields, with the 10-year note trading around 4.788%, reflected market expectations for further tightening by the Federal Reserve. Investors are currently pricing in about a 60% probability of a 25-basis-point rate hike at the Fed's September meeting, according to the source material.

Adding to the pressure, oil prices extended gains for a third day, with Brent crude rising approximately 0.5% to $97.46 a barrel. In Japan, stronger-than-expected economic data, including an upward revision to second-quarter GDP growth and the fastest rise in real wages since 2021, increased expectations for a potential Bank of Japan interest rate hike next week.

Regional Markets Show Divergent Performance

Hong Kong's Hang Seng index fell 0.5%, with its technology shares remaining under pressure. Mainland Chinese markets fared slightly better, with the CSI 300 and Shanghai Composite posting modest gains after August trade data showed resilient export and import growth.

Elsewhere, Australia’s S&P/ASX 200 fell 0.8% after a sharp drop in September consumer sentiment, which was hit by higher gasoline prices and interest rate concerns. Other major indexes, including Japan's Nikkei 225, Singapore's Straits Times, and India's Nifty 50, were flat or slightly down.