Asian Stocks Surge as Tech Gains and Rate Hike Bets Boost Dollar

Asian markets rallied on Tuesday as technology stocks surged and lower oil prices lifted sentiment. The MSCI's broadest index of Asia-Pacific shares outside Japan hit a two-week high, rising 0.75%. Tech-heavy South Korean stocks jumped 2% before paring gains, while Taiwan shares reached a record high and were last up 0.26%. Japanese markets were closed for a holiday.

The tech sector's optimism was fueled by Meta Platform's Muse AI assistant, which saw exceptional recent traction after its launch. Strong demand for the app revived enthusiasm for the technology sector, lifting related shares. 'The excitement around Meta Muse is adding weight to the idea that millions of people could eventually use persistent AI agents,' said Chris Weston, head of research at Pepperstone.

Investors are also anticipating further interest rate hikes from major central banks, which has strengthened the dollar and put pressure on the yen. The Federal Reserve raised rates last week and warned its fight against inflation was not over, keeping the door open to further tightening. The dollar index hit a seven-week high at 100.4.