Asia report: Most markets rise ahead of key US inflation report

(Sharecast News) - Asia-Pacific markets mostly rose on Thursday, supported by a strong earnings report from Micron Technology on Wall Street, while investors looked ahead to the release of the Federal Reserve's preferred inflation gauge.

"Risk appetite is back in stereo: Micron's guidance has reignited the AI infrastructure trade, putting a fresh floor under semis and the hyperscaler capex story, while Brent below $73 per barrel has fully erased the Iran-conflict premium," said Patrick Munnelly, market strategy partner at TickMill.

"That combination is rocket fuel for equities, but today's PCE print is the gatekeeper."

Micron shares surged almost 15% in extended trading on Wednesday after the chipmaker reported fiscal third-quarter results that beat expectations.

The company also guided for current-quarter revenue of $50bn, up from $11.3bn a year earlier and ahead of the $43.58bn forecast, boosting sentiment across semiconductor names.

Munnelly said global risk appetite had turned higher again after Micron delivered a stronger-than-expected sales forecast, helping revive confidence in the AI trade after the recent tech-led selloff.

"Micron's shares jumped around 15% in after-hours trading after its quarterly revenue outlook beat Wall Street expectations," he said.

"That matters because Micron has become the key near-term sentiment test for AI-linked semiconductors.

"After several sessions of profit-taking, crowded positioning and concern about leveraged exposure, investors needed confirmation that demand for AI infrastructure remains strong."

"The market reaction suggests that investors are still willing to treat AI as a boom rather than a bubble," Munnelly added.

Investors were also watching developments in Washington after the White House asked Congress for $87.6bn in supplemental spending to fund the Iran war and other expenses.

The request, made by Office of Management and Budget director Russell Vought in a letter to House Speaker Mike Johnson, was immediately opposed by congressional Democrats.

Attention later turns to May's personal consumption expenditures price index, the Fed's preferred inflation measure.

Economists polled by Dow Jones expect headline PCE to rise 0.5% month on month and 4.1% year on year, up from April's 0.4% monthly gain and 3.8% annual increase.

Core PCE is expected to rise 0.3% on the month and 3.4% year on year, above April's respective readings of 0.2% and 3.3%.

"Today's US data slate is therefore crucial," Munnelly said.

"The May PCE inflation report is the highlight, but markets will also get the third estimate of Q1 GDP, previously 1.6% q/q SAAR, and preliminary May durable goods orders."

Munnelly said the key question was whether softer energy prices could offset the Fed's concerns about sticky services inflation and resilient underlying price pressure.

"Headline PCE may cool because oil has fallen, but policymakers under Chair Warsh are likely to focus heavily on whether trimmed-mean, sticky-price and services measures are also improving," he said.

"If the inflation slowdown is concentrated in energy, the Fed may be reluctant to validate a broad easing in financial conditions.

"If core components soften as well, the market could begin to question the pricing of another hike later this year."

Oil prices fell as tensions in the Middle East continued to ease.

Brent crude futures were last down 1.9% on ICE at $72.34 per barrel, while the NYMEX quote for West Texas Intermediate fell 1.63% to $69.19.

Data from Kpler showed at least 20 oil tankers carrying 35m barrels had exited the Strait of Hormuz after Iran and the US agreed to reopen the waterway.

"Iran will not have the ability to close the Strait of Hormuz going forward," energy secretary Chris Wright said at a New York conference.

"The second major support for risk is oil," Munnelly said.

"Brent has fallen for a fourth straight session to below $72.50 per barrel, fully erasing the gains made during the Iran conflict and returning to pre-conflict levels from late February. The real oil price is now below its longer-run average."

Munnelly said that was a meaningful macro development because it removed a major stagflationary impulse from the market narrative.

"The decline reflects easing supply concerns as tanker traffic through the Strait of Hormuz normalises and the US-Iran peace process continues to make progress," he said.

"The market is now pricing a much lower probability of sustained disruption to global energy flows."

Most markets manage gains, Hong Kong weaker

Japan's Nikkei 225 jumped 4.61% to 72,366.34, while the broader Topix gained 1.33% to 4,016.47.

Advantest surged 15.06%, Kioxia Holdings rose 12.27%, and Taiyo Yuden added 11.2%.

In China, the Shanghai Composite rose 0.23% to 4,120.28, while the Shenzhen Component climbed 1.82% to 16,344.08.

Beijing Worldia Diamond Tools gained 10.28%, FangDa Carbon New Material rose 10.08%, and Guizhou Gas Group Corporation added 10.06%.

Hong Kong's Hang Seng Index fell 1.43% to 23,076.91.

Sunny Optical Technology Group dropped 11.73%, while Trip.com Group lost 10.92% after reporting a 41% fall in first-quarter net income to CNY 2.5bn, or $367m, from CNY 4.3bn a year earlier.

The company said it was subject to investigations or inquiries by national authorities over competition law, consumer protection and other matters, and warned that findings from an investigation by China's State Administration for Market Regulation into alleged monopolistic practices could lead to fines, penalties or changes to its business practices.

Laopu Gold fell 8.1%, while Alibaba Group dropped 4.43% after Anthropic accused the company of trying to extract its artificial intelligence capabilities.

Anthropic said Alibaba had carried out "the largest known distillation attack on Anthropic to date," and said coordinated action between government and industry was needed to protect US AI leadership.

South Korea's Kospi 100 surged 6.43% to 11,447.90.

SK Holdings jumped 20.51%, SK Hynix rose 13.06%, and Samsung C&T gained 7.79%.

SK Hynix rallied after saying it planned to raise as much as $29.4bn through a US stock market listing.

The company plans to issue 17.79m new shares as American depositary receipts on Nasdaq, potentially raising KRW 45.45trn, or $29.65bn, with trading expected to begin on 10 July.

SK Hynix said the listing would broaden its investor base and allow "its true corporate value to be properly evaluated".

"South Korea's rebound is especially important because the Kospi had been at the centre of the recent semiconductor unwind," Munnelly said.

"The nearly 6% rally reflects both relief after forced selling and renewed confidence in the chip cycle.

"But it should still be treated as a recovery within a volatile trend, not a clean all-clear."

Sydney in the red as Judo plunges on profit warning

Australia's S&P/ASX 200 fell 0.68% to 8,748.70.

Judo Capital plunged 40.39%, tracking its biggest one-day fall on record, after cutting its FY26 profit-before-tax guidance to between AUD 163m and AUD 169m from AUD 180m to AUD 190m because of weaker asset quality and higher provisioning charges.

The bank said gross loans and advances exceeded AUD 14.4bn as of 24 June and were expected to reach between AUD 14.6bn and AUD 14.7bn by 30 June.

Net interest margin is expected to be above 3.2% in the second quarter, while the cost-to-income ratio for the second half is expected to remain below 48.5%.

Judo expects FY27 profit before tax of between AUD 210m and AUD 220m.

Worley fell 9.7%, while IperionX lost 9.46%.

Australia's unemployment rate edged down to 4.4% in May from April's more than four-year high of 4.5%, in line with expectations.

Employment rose by 40,300 to 14.74m, beating forecasts for a 30,000 increase and rebounding from an upwardly revised loss of 40,700 jobs in April.

Full-time employment rose by 5,900 to 10.14m, while part-time employment increased by 35,200 to 4.60m.

The number of unemployed fell by 18,300 to 671,300, while the participation rate edged up to 66.7% from 66.6%.

The underemployment rate rose to 5.9% from 5.8%, and total monthly hours worked fell by 22m to 2,010m.

Across the Tasman Sea, New Zealand's S&P/NZX 50 gained 0.69% to 13,493.05.

Tourism Holdings rose 13.33%, Spark New Zealand gained 3.94%, and A2 Milk Company added 3.31%.

Dollar flat-to-stronger against regional peers

In currencies, the dollar was last up 0.04% on the yen to trade at JPY 161.84, was flat against the Aussie at AUD 1.4491, and gained 0.04% on the Kiwi to change hands at NZD 1.7705.

Reporting by Josh White for Sharecast.com.