By Scott Murdoch
SYDNEY, Feb 25 (Reuters) - Asia's financial markets were higher on Wednesday with Korean chipmakers leading gains, as investors double down on what they see as the safest bet on artificial intelligence (AI), while the yen remained in focus.
Investors rocked by volatility in recent months were also awaiting U.S. President Donald Trump's State of the Union speech on Tuesday evening in Washington. Market participants are bracing for comments that could touch on policies from trade to affordability
to Iran.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 1% higher in early trading.
Japan's Nikkei set a record high. It was up 1.1% at 57,956.92 in early trade after touching an intraday peak of 58,047.89. The broader Topix edged up 0.07% to 3,818.73.
Korea's KOSPI was nearly 1.7%, trading above 6,000 for the first time. The index is up 44% so far this year.
A global memory chip shortage has seen Samsung Electronics and SK Hynix stock prices double since October, as cash has surged up the AI supply chain to the enormously popular chipmakers. Leading global chipmaker Nvidia Corp reports its fourth quarter results after the U.S market close on Wednesday.
In Hong Kong, the Hang Seng Index was up 0.36% and China's CSI300 was 0.3% higher.
Australia's S&P/ASX200 was up as much as 1.1% to a record high despite higher consumer prices in January which increased the risk of more interest rate hikes.
The yen strengthened 0.12% against the greenback to 155.7 per dollar on Wednesday, after dropping by 0.8% on Tuesday.
A news report said Japanese Prime Minister Sanae Takaichi had conveyed her reservations about further interest rate hikes to Bank of Japan Governor Kazuo Ueda, raising doubts over the next rate increase.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro,fell 0.05% to 97.84, with the euro up 0.05% at $1.1777..
A Reuters poll released last week showed that a majority of economists expect the BOJ to raise its key rate to 1% by the end of June, with some anticipating a move as soon as April because of mounting concerns about inflationary pressures and a weak yen.
Traders are currently pricing in 50% odds of a hike in April, and a 65% chance of a hike by June.
"Given there was an expectation that she would shift her stance on monetary policy this latest news brings uncertainty back into the market, and leaves investors keenly interested to see who her nominations are for the two new Bank of Japan board members which is expected to be announced today," NAB analysts said.
The yield on benchmark U.S. 10-year notes rose 0.5 basis points to 4.039% while the 30-year bond yield rose 0.4 basis points to 4.6933%.
Positive sentiment towards the AI sector returned overnight after San Francisco-based startup Anthropic unveiled 10 new ways for business customers to use its AI plugins, which revived enthusiasm that AI would boost profits across a range of different sectors.
AI-related stock prices have see-sawed in recent weeks as investors were concerned heavy capital spending on AI may not translate into profits soon,
"AI is not a bubble technology, but that doesn’t mean every AI bet will pay off. There are companies spending significantly on AI that likely won’t see a return," said Laura Cooper, Nuveen's head of macro credit and global investment strategist.
Speeches on Tuesday by Federal Reserve governor Lisa Cook and Chicago Fed president Austan Goolsbee noted it was their view the US labour market could be starting to stabilise.
"It's apparent that most members think it as appropriate to wait for further progress on inflation before adjusting policy lower," said ANZ analysts.
"While there have been signs of labour market stabilisation in 2026, labour market conditions are soft and a source of disinflationary pressure."
ANZ has predicted the Fed will start easing rates in the second quarter, most likely in June and forecast 75 basis points of cuts this year
U.S. crude rose 0.75% to $66.12 a barrel and Brent rose to $71.30, up 0.75%.
Spot gold was flat to $5,138.49 an ounce while spot silver fell 0.43% to $86.96 an ounce.
(Editing by Kim Coghill)
