Asian markets gain as oil falls and rate expectations shift

Fidelity

Asian markets moved higher on Thursday as falling oil prices eased some inflation concerns, while attention turned to US jobs data and the outlook for interest rates.

The MSCI Asia Pacific Index rose 1.1%, supported by gains in semiconductor shares. South Korea’s KOSPI added 0.26%, while Japan’s markets were mixed. The Topix gained 0.5%, but the Nikkei 225 fell 0.2%.

Technology stocks received support after Broadcom indicated that artificial intelligence chip sales could rise significantly over the next two years. The outlook strengthened sentiment towards semiconductor companies, including SK Hynix, and reinforced expectations that AI-related demand will remain an important driver for the sector.

Oil prices moved lower after recent gains. Brent crude fell around 1% to $94.67 a barrel, while WTI declined 1.5% to $89.62. The drop followed comments from US President Donald Trump suggesting that military action involving Iran was unlikely to become a prolonged conflict.

Lower oil prices reduced some of the immediate pressure on inflation expectations. Energy costs have been a key concern because higher prices can keep inflation elevated and increase the risk of tighter monetary policy.

US Treasury yields stabilised, with the 10-year yield near 4.77%. Bond markets remain central to equity valuations because higher yields increase financing costs and make fixed-income assets more competitive with shares.

The Japanese yen also strengthened for a second session, briefly reaching 157.63 against the US dollar. The move increased attention on possible action by Japanese authorities and on the Bank of Japan’s next policy decision.

Expectations of tighter Japanese monetary policy have increased after a Bank of Japan board member raised the possibility of a larger or consecutive interest-rate increase. Japanese government bond yields also moved sharply, adding to volatility across local financial markets.

The combination of a stronger yen and higher domestic interest rates could affect Japanese exporters, borrowing costs and asset valuations. Timing now matters because any change in Bank of Japan policy could quickly alter currency and bond market positioning.

Fidelity Asian Values Plc (LON:FAS) provides shareholders with a differentiated equity exposure to Asian Markets. Asia is the world’s fastest-growing economic region and the trust looks to capitalise on this by finding good businesses, run by good people and buying them at a good price.

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