Oil prices ease and Asian shares gain on hopes for Mideast deal, as companies report strong profits

BANGKOK: Asian shares surged, and oil prices slipped Wednesday after the US stock market rallied to records, helped by strong corporate earnings reports and hopes for a deal setting the stage for talks that might eventually lead to an end to the war in Iran.

Benchmarks jumped more than 3 per cent in Tokyo, Seoul and Taiwan as shares in computer chipmakers and other AI-related companies advanced.

Japan's Nikkei 225 gained 3.3 per cent to 66,068.24, with chipmaker Kioxia surging 6.3 per cent while chip testing equipment maker Advantest soared 6.9 per cent.

The Kospi in Seoul shot up 4.4 per cent to 6,642.02, led by a 6.7 per cent gain for memory chipmaker SK Hynix. Tech giant Samsung Electronics advanced 4.1 per cent.

Taiwan's Taiex advanced 3.1 per cent as major chipmaker TSMC gained 3.5 per cent.

“Clearly, today the market is rallying on the back of AI stocks. You look across the other sectors, there's a bit of activity here and there, but really the focus has been back on semiconductors, technology and AI," said Neil Newman, head of strategy for Astris Advisory Japan.

Elsewhere in the region, the Shanghai Composite index picked up 1.3 per cent to 3,873.56, while Hong Kong's Hang Seng edged 0.1 per cent higher, to 25,881.20.

In Australia, the S&P/ASX 200 rose 0.7 per cent to 9,209.00.

Further declines in oil prices have also buoyed shares.

Brent crude, the international standard, lost 1.2 per cent to USD 78.43 per barrel early Wednesday. On Tuesday, it sank 5.3 per cent as hopes rose for progress toward a full reopening of the Strait of Hormuz. Oil prices swung between USD 72 and USD 102 through July on uncertainty about when calm in the Middle East would allow oil tankers to freely exit the Persian Gulf again to deliver crude around the world.

Iran and Oman were inching toward a deal to reopen the strait, though that appears to be contingent on the United States lifting its blockade on Iran's ports.

"All in all, it's looking much brighter. We're still not completely out of the woods yet, but I think we're seeing some route out of this now, and it's been reflected in the markets,” Newman said.

US benchmark crude shed 1.1 per cent to USD 74.96 per barrel.

On Tuesday, the S&P 500 shot up 1.8 per cent, topping its prior all-time high set in June. The Dow Jones Industrial Average added 1.7 per cent to its own record set the day before, while the Nasdaq composite jumped 2.6 per cent.

Profits are piling up for companies as easing oil prices assuage worries about inflation.

Palantir Technologies helped lead the way, surging 29.5 per cent after its CEO Alex Karp said its overall revenue leapt 93 per cent in what he called an “otherworldly” quarter.

Such reports have helped to allay worries over a possible bubble in stock prices because of the AI boom.

Caterpillar climbed 5.6 per cent after the heavy-equipment maker likewise reported stronger profit and revenue than analysts expected. It is also benefiting from the AI boom through increased orders for turbines used to power data centres, among other things.

Stocks of computer chip companies also strengthened. NVIDIA gained 2.6 per cent, Broadcom jumped 6.6 per cent, and Micron Technology surged 7.6 per cent.

Shares in Chipotle Mexican Group tumbled 9.7 per cent, however, on fears that its future profits could be hurt after the chain removed jalapenos from some of its restaurants following a salmonella outbreak. Chipotle said that Minnesota health officials have no ongoing concerns with it.

Reports on the US economy showed it remains resilient even though inflation is worse than anyone would like. US employers were advertising nearly 7.4 million job openings at the end of June, the Labour Department said, a slight slowdown from May's level but close to economists' expectations.

In other dealings early Wednesday, the US dollar slipped to 157.48 Japanese yen from 157.74 yen. The euro rose to USD 1.1540 from USD 1.1532.