Asian Stocks Rallied on Tech Boost; Oil Prices Climbed Amid Iran Tensions

Boosted by technology stocks, Asian equity markets moved higher as traders increased bets on artificial intelligence while downplaying geopolitical risks in the Middle East. Despite U.S. President Donald Trump’s rejection of Iran’s latest peace proposal, which pushed oil prices upward, the momentum in tech shares remained resilient.

1. Asian Markets Diverge and Rally; AI Chip Sector Outperforms
   The MSCI Asia Pacific Index once surged 1.1% to an intraday high before paring some gains. Fueled by the AI investment boom, South Korea’s stock market soared as much as 5%, hitting a record high. Following the all-time peak of the Philadelphia Semiconductor Index last Friday, the Bloomberg Asia Semiconductor Index also climbed to a high level, with the chip sector acting as a core driving force for the market rally.

Individual stocks showed divergent performance. Nintendo faced downward pressure and tumbled as much as 10% in Tokyo trading after the company issued a warning over rising chip procurement costs.

2. Middle East Tensions Roil Commodities; Oil and U.S. Treasury Yields Rise
   Although tech stocks buoyed equity sentiment, Middle East tensions continued to weigh on global markets with risk assets trading mixed. The S&P 500 futures edged down 0.2%. Due to Trump’s rejection of Iran’s peace proposal, traffic in the Strait of Hormuz was restricted. Brent crude rose 3.4%, nearing $105 per barrel.

The persistent surge in oil prices deepened global inflation concerns and pressured the bond market. The 10-year U.S. Treasury yield climbed 3 basis points to 4.39%. In the currency market, the U.S. dollar strengthened across all G10 currencies on its traditional safe-haven appeal amid Middle East conflicts.

3. Global Equities Hit Record Highs; Corporate Earnings Become Core Driver
   Global stock markets have fully absorbed the short-term negative shocks from Middle East conflicts and advanced to historic highs. Investors widely bet that massive capital inflows into artificial intelligence will continuously boost corporate profits. Asian markets, especially AI supply chain enterprises, benefited substantially. Capital flooded into chipmakers, which are regarded as the cornerstone of the AI industrial chain. Outside the technology sector, market fluctuations remained muted, reflecting market expectations of an eventual de-escalation in the Middle East despite lingering uncertainties.
4. U.S. Corporate Earnings Beat Expectations; Momentum Trading Gains Popularity
   Global stocks surged last week, with both the S&P 500 and Nasdaq 100 notching record highs. Solid U.S. employment data paired with better-than-expected corporate earnings boosted market confidence. Investors remained optimistic about U.S. economic resilience, believing the world’s largest economy can withstand energy pressures stemming from the Iran conflict.

Momentum strategies, which involve heavily buying recently outperforming assets, have become a prominent market feature. The investment scope has expanded to junk bonds and cryptocurrencies. A global equity momentum index closed near its highest level since the global financial crisis last Friday, while the semiconductor index surged 11% in five trading days.

5. Institutions Warn Against Market Overheating; Key Events Awaited This Week
   Multiple investment banks issued warnings over the overheated market sentiment. Strategists at Barclays noted that current trading patterns have reached historically extreme levels that typically precede market sell-offs. Goldman Sachs’ trading division also highlighted in a weekly report that high-momentum stocks are excessively valued with near-record positioning based on prime brokerage data, amplifying bubble risks.

Apart from Middle East geopolitics, investors will track critical events this week, including the meeting between U.S

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