Macro Update
Asian stocks rally on AI chip demand: Strong appetite for AI-related data boosted semiconductor stocks, with South Korea’s tech-heavy index rising 1.4% and Taiwan gaining 1% to reach a three-month high. MSCI’s broadest Asia-Pacific index excluding Japan added 0.9%, while US equity futures pointed higher and Japanese markets remained closed for the Silver Week holiday.
Oil prices fall to one-week low: Brent fell 1.7% to $102.08 a barrel and US crude dropped 1.8% to $98.53, their lowest levels since September 10, as hopes for US-Iran diplomacy at this week’s UN gathering reduced the geopolitical risk premium. Saudi exports also recovered to more than 4 million barrels a day in September after August’s decline, easing supply concerns despite continued Houthi attacks.
Yen holds near ¥157 per dollar: The Japanese currency traded around ¥156.85 after losing 2% last week, with thin holiday liquidity keeping investors alert to possible intervention following reports of official rate checks. The euro was little changed at $1.1482, while sterling traded at $1.339.
Gold slips as Treasury yields rise: Higher US government bond yields weighed on demand for the non-yielding metal, pushing gold 0.5% lower to around $4,355 an ounce.
US bond yields hit multi-year highs: Two-year Treasury yields have climbed 36 basis points over the past fortnight to 4.76%, their highest since mid-2024, as hawkish Fed guidance left markets pricing a 56% chance of an October hike and an almost certain move by year-end. Growing concerns over fiscal deficits also pushed the risk premium on French government debt to its widest since the eurozone debt crisis.
Merz faces election setback: German Chancellor Friedrich Merz’s conservatives suffered their weakest result since 1949 as the far-right Alternative for Germany led state polls in the northeast, potentially adding further pressure to German government bonds.
