Asian stocks edge higher as Wall Street rebound offsets oil-driven caution

SINGAPORE: Asian equities posted uneven gains on Wednesday as a strong Wall Street rebound supported sentiment, while investors remained cautious ahead of major US technology earnings and rising Middle East tensions pushed oil prices higher.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.2%. South Korea’s Kospi was up 1.5% after gaining more than 6% earlier in the session as semiconductor stocks recovered from recent losses.

Japan’s Nikkei 225 moved between gains and losses, Hong Kong stocks fell 1.2%, and S&P 500 e-mini futures slipped 0.2%.

Brent crude climbed 1.3% to $92.22 a barrel after two tankers carrying Saudi oil to Asia reversed course in the Red Sea on Tuesday following attack threats from Yemen’s Iran-aligned Houthis.

Westpac analysts said equity markets had largely looked past geopolitical risks and focused on a rebound in technology stocks, particularly semiconductors.

Investor attention is now turning to results from Alphabet and Tesla. Alphabet faces scrutiny over delays to a major artificial intelligence model, while Tesla is widely expected to report its first quarterly cash burn in more than two years.

Laura Cooper, global investment strategist and head of macro credit at Nuveen, said the earnings season would test whether the small group of companies driving market gains could continue meeting elevated expectations.

Indian pharmaceutical shares fell 1.5% after US President Donald Trump said generic drugs imported into the United States would face a 0% tariff for two years from August 1, followed by a 100% rate for one year and 200% thereafter.

The US dollar index held near a one-week high at 101.14. The dollar was steady at 163.17 yen after reaching a four-decade high against the Japanese currency on Tuesday.

Japanese Finance Minister Satsuki Katayama said the government remained prepared to take decisive action in currency markets if required but did not comment on specific exchange-rate levels.

A weaker yen and higher oil prices pushed Japan’s imports to a record in June. Exports also exceeded expectations, supported by strong demand from artificial intelligence-related data centres and the currency’s weakness.

Bond and currency markets remained broadly stable ahead of central bank meetings next week. A Reuters poll showed economists expect the US Federal Reserve to keep rates unchanged for the rest of 2026, although the risk of an increase remains elevated.

Fed funds futures indicate that one rate increase by December is probable, while the likelihood of a cumulative increase of at least 50 basis points by year-end is roughly even, according to CME Group’s FedWatch tool.

The US 10-year Treasury yield rose 0.2 basis point to 4.628%. Gold gained 1.2% to $4,124.74 an ounce.

Bitcoin fell 0.5% to $66,077.16, while ether was little changed at $1,923.25.