Asian Shares Rise as AI Boosts Tech, Oil Prices Ease Amid Saudi Supply Hopes

Asian share markets edged higher on Monday as tech stocks benefited from artificial intelligence's insatiable demand for data. The Nikkei futures rose 0.5% and South Korea's tech-heavy index gained 1.1%, while MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3%. Meanwhile, oil prices eased as hopes grew that Saudi Arabia could boost supplies after a Houthi attack on Riyadh.

The yen jumped after Japanese authorities conducted rate checks in the currency market, leaving the dollar steady at 157 yen. The US Federal Reserve's hawkish guidance last week has futures wagering on a 56% chance of another interest rate hike in October, with many expecting two more hikes by year-end. Analysts at BofA wrote that 'tightening cycles are generally front-loaded, and the Fed almost never stops after one hike.'

Bond markets remained tense after a vicious selloff saw US two-year yields jump 36 basis points to heights not seen since mid-2024 at 4.7604%. The news kept the euro flat at $1.1477, having shed almost one percent last week as the dollar gained broadly.

The closure of Saudi Arabia's main east-to-west pipeline has materially altered the state of the oil market, said Vivek Dhar, head of commodities at CBA. He estimates that oil markets have five to 10 weeks before global oil and refined product inventories deplete.