Asian shares gained as chipmakers rally, brent extends gains

Asian shares gained after three days following a rally in chipmakers.

Oil prices extended their gains as well after the US said it attacked Iran for the second consecutive day.

South Korea's Kospi index and Japan's Nikkei were up around 2% each. The MSCI Asia Pacific Index was up 0.5%.

The chip sector remained in focus after SK Hynix Inc.’s US listing was more than seven times oversubscribed, according to people familiar with the matter. Also, Bain Capital sold its entire stake in flash memory chipmaker Kioxia Holdings Corp.,

Brent extended its gains to a third day, climbing to about $78.80 a barrel, as the latest strikes stoked fears the conflict could disrupt shipping through the Strait of Hormuz.

Earlier, the two-year Treasury yield, which is sensitive to expectations for Federal Reserve policy, rose as much as five basis points during the US session to 4.23%, within a basis point of last month’s high. The 10-year yield climbed as much as four basis points to 4.59%, its highest since late May. Gold steadied after a three-day decline.

The flare-up in tensions and surge in oil prices have reignited inflation concerns, prompting money markets on Wednesday to bring forward bets on the next Fed interest-rate increase to October from December. That has added to pressure on markets already grappling with elevated stock valuations after this year’s rally in artificial intelligence shares.

The additional strikes were launched “to further degrade their ability to threaten freedom of navigation in the Strait of Hormuz,” the US Central Command said in a social media post.

Veteran strategist Ed Yardeni said the rupture in the ceasefire between the US and Iran risks sparking a fresh acceleration in price growth, which in turn could compel the Fed to raise interest rates.

A few Fed officials in their most recent policy meeting said there was a case for raising rates, though they ultimately supported the decision to leave rates on hold. More generally, minutes of their June gathering reflected growing concern over inflation just as worries over the labor market slightly receded.

With inputs from Bloomberg