Asian stocks rise as tech shares rebound and oil gains on US-Iran tensions

Technology shares helped lift most Asian stock markets on Thursday as traders bought back into companies linked to artificial intelligence, while oil prices extended gains as tensions between the United States and Iran raised concern about inflation and shipping risks.

Investor interest in artificial intelligence has been tested in recent months by concern over high valuations and questions about when large investment in the sector will produce returns. Several previously strong technology stocks in South Korea and Japan have come under pressure this year.

Alphabet, Google's parent company, added to those concerns on Wednesday when it said it could spend as much as $205 billion on AI this year, more than expected. Even so, Asian traders moved back into beaten-down technology names. Seoul was up more than four percent at one point, helped by gains in chip companies SK hynix and Samsung. Tokyo also rose, supported by Advantest and Tokyo Electron.

Hong Kong, Sydney, Taipei, Manila and Jakarta also gained. Investors are expected to watch results next week from Microsoft, Meta and Amazon for details of their capital spending plans.

Charu Chanana at Saxo Markets wrote that large technology companies did not need to stop spending for earnings season to be positive, but said the financial trade-off needed to improve. Chanana said the best results would come from companies showing that AI demand was turning into revenue, margins and cash flow.

Oil prices rose as traders grew more nervous about renewed strikes involving US and Iranian forces. Brent crude jumped more than three percent on Wednesday and moved back above $95 for the first time, after President Donald Trump threatened to strike one Iranian bridge or power plant in response to each attack on shipping in the Strait of Hormuz.

Iranian Foreign Minister Abbas Araghchi said on X that Iran would respond in kind to any attack on its infrastructure, saying the country's defence doctrine was "eye for an eye".

Yemen's Houthi rebels claimed they struck two Saudi oil tankers in the Red Sea on Wednesday, which the source said could open a new front in the war. The Red Sea escalation followed a Houthi threat to blockade Saudi ports, adding pressure on Middle East shipping routes already affected by fighting over the Strait of Hormuz.

The source said fighting over Hormuz, a route normally used for a fifth of world oil and gas, had collapsed a preliminary US-Iran peace deal, with Tehran reimposing its blockade and firing on vessels seeking to pass.

The possibility that higher oil prices could add to inflation has raised expectations that the Federal Reserve could lift interest rates. Investors are looking to next week's US central bank policy meeting for guidance. Money markets were pricing about a 30 percent chance of a rate increase, according to Bloomberg.

Trade policy added to uncertainty after Trump's trade envoy Jamieson Greer signaled Tuesday that Washington was set to impose new levies on dozens of countries soon.

In currency trading, the yen hit a fresh four-decade low against the dollar, with concern focused on the Bank of Japan's slow pace of monetary tightening and speculation that the Fed could raise rates soon. Rising oil prices and concern about Japan's economy also weighed on the currency.

Around 0230 GMT, Tokyo's Nikkei 225 was up 0.5 percent at 66,424.44, Hong Kong's Hang Seng Index was up 0.6 percent at 25,038.26, and the Shanghai Composite was down 0.1 percent at 3,864.20. West Texas Intermediate crude was up 1.5 percent at $88.14 a barrel, while Brent North Sea crude was up 1.9 percent at $95.83. The euro was at $1.1421, the pound was at $1.3386, the euro was at 85.32 pence and the dollar was at 163.06 yen. In earlier closes, the Dow was flat at 52,218.58 and London's FTSE 100 was up 1.2 percent at 10,716.97.