BY COMFORT OGBONNA
Asian stock markets advanced Thursday as strong investment plans by major U.S. technology companies boosted confidence in the semiconductor sector, while escalating conflict in the Middle East pushed oil prices to their highest levels in six weeks, renewing concerns about inflation and global economic growth.
Investor sentiment received support after leading U.S. technology firms reaffirmed aggressive spending on artificial intelligence infrastructure, a move expected to benefit Asian chip manufacturers that supply critical components for AI data centers and cloud computing.
At the same time, rising geopolitical tensions added a layer of uncertainty to financial markets. Brent crude futures climbed about 2% in early trading to around $96 per barrel after the United States launched another round of military strikes targeting Iran and Yemen’s Houthi forces reportedly attacked oil tankers in the Red Sea. The developments intensified fears of disruptions to global energy supplies.
Higher oil prices also fueled expectations that inflationary pressures could remain elevated, leading investors to reassess the outlook for U.S. monetary policy. Short-term U.S. Treasury yields climbed to their highest levels in 17 weeks as traders increased bets that the Federal Reserve may be forced to tighten monetary policy sooner than previously anticipated.
Market participants remain concerned that prolonged instability in the Middle East could have significant consequences for the global economy. Analysts have warned that any disruption to shipping through both the Strait of Hormuz and the Bab el-Mandeb Strait would affect a substantial share of the world’s oil and natural gas exports, potentially driving energy prices even higher and increasing transportation costs worldwide.
Strategists said the latest surge in crude prices has revived worries that higher energy costs could slow economic growth while keeping inflation stubbornly above central bank targets.
Despite those concerns, optimism surrounding artificial intelligence investments helped lift equity markets across Asia.
Technology stocks led gains after earnings reports from Alphabet and Tesla indicated that spending on AI infrastructure remains robust. Alphabet increased its projected capital expenditures for the year, signaling continued heavy investment in data centers, computing capacity and AI technologies.
Much of that spending is expected to flow through the semiconductor supply chain, providing a significant boost for Asian manufacturers that produce memory chips, processors and other advanced components used in AI systems.
South Korea’s benchmark stock index climbed more than 3%, supported by strong gains in major technology companies including SK Hynix and Samsung Electronics. Japan’s Nikkei index also moved higher as investors welcomed the outlook for continued demand across the semiconductor industry.
The broader MSCI Asia-Pacific index excluding Japan rose about 1% during early trading and was on track to post weekly gains of roughly 3%, ending a two-week losing streak.
Investment managers said stronger cloud-computing demand continues to justify rising AI-related capital spending, reinforcing expectations that the current investment cycle still has significant momentum.
Analysts also noted that artificial intelligence is increasingly shifting beyond infrastructure development toward broader commercial applications. Major cloud providers are using AI to expand into areas such as internet search, online shopping and enterprise software, increasing competitive pressure across the technology sector.
Even with strong earnings from major technology companies, investors remain focused on whether the massive investments in artificial intelligence will generate enough revenue and profit growth to justify the high market valuations of many leading firms.
Some strategists cautioned that financial markets are likely to remain volatile as encouraging corporate earnings compete with mounting geopolitical risks and uncertainty surrounding global energy supplies.
In currency markets, the Japanese yen remained under pressure near its weakest level in nearly four decades.
The currency traded around 163 yen per U.S. dollar after giving back gains from the previous session. Earlier in the week, the yen touched its lowest level since December 1986, keeping traders alert for possible intervention by Japanese authorities.
The recent weakness comes despite reports that officials at the Bank of Japan may be willing to raise interest rates more quickly if economic conditions warrant tighter monetary policy.
Japanese government officials have repeatedly warned against excessive currency volatility, although previous verbal interventions have done little to halt the yen’s decline.
Market analysts said the risk of direct foreign exchange intervention remains, but they believe a lasting recovery in the yen would likely require a more aggressive pace of interest rate increases from the Bank of Japan.
Meanwhile, the U.S. dollar continued to benefit from its traditional safe-haven appeal as geopolitical uncertainty intensified. Expectations for higher U.S. interest rates also strengthened demand for the currency, with financial markets pricing in additional Federal Reserve rate increases later this year, including a move that many investors now expect as early as September.
With geopolitical tensions, inflation concerns and the rapid expansion of artificial intelligence all shaping investor sentiment, global markets are expected to remain highly sensitive to developments on both the economic and geopolitical fronts in the weeks ahead.
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