Asian shares saw modest gains on Wednesday as companies in the artificial intelligence sector rebounded from a recent selloff. In South Korea, chipmakers Samsung Electronics and SK Hynix rose over 2%, while Kioxia in Japan stabilized following previous losses. The MSCI's broadest index of Asia-Pacific shares outside Japan increased by 0.5%, building on a slight decline in U.S. stocks from the previous session. Japan's Nikkei gained 0.2%, and South Korea's Kospi added 1.8%.
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Despite these gains, market sentiment remained cautious, influenced by high oil prices and worries about energy supplies amidst recent Houthi missile and drone attacks on Saudi Arabia. U.S. crude prices rose 0.8% to $94.96 a barrel, while Brent crude hit $106.6. Analyst Kyle Rodda from Capital.com noted that the market's current hesitation reflects broader geopolitical concerns and their impact on energy markets.
In a sign of risk aversion, longer-dated bonds saw increased demand as investors sought stability, with the yield on benchmark 10-year Treasury notes steady at 5.221%, and the 30-year notes at 5.569%.
In the U.S., bank stocks declined amid mixed quarterly earnings reports from Citigroup and other firms, which affected the overall market. U.S. stock futures for the S&P 500 e-minis showed a slight increase of 0.04% at 7,858.8.
Market participants are looking forward to the release of the U.S. consumer price index data later in the day, which could provide insights into the Federal Reserve's interest rate strategy. Economists predict a rise in headline inflation to an annual rate of 3.6% in September, driven by recovering energy prices, while core CPI is expected to rise by 0.2% on a monthly basis. Carol Kong, a currency strategist at Commonwealth Bank of Australia, cautioned that an unexpected increase in core CPI could raise expectations for an interest rate hike in October. Current estimates place the likelihood of such a hike at 22%, according to the CME FedWatch Tool. New York Federal Reserve President John Williams has indicated that the Fed might consider one more rate increase this year to address inflation, but he does not foresee additional hikes in 2027.