Yen Weakens, Tech Rebounds & Stock Rally Continues - Asia Market Wrap

The AI-led rally on Wall Street extended into Asia, with semiconductor stocks driving another leg higher in global equities, while the Yen weakened to its lowest level against the Dollar since 1986.

MSCI's Asia Pacific Index rose 1.4% on the final trading day of the quarter, building on its strongest quarterly performance in nearly 17 years after US chipmakers helped the S&P 500 snap a five-session losing streak overnight.

Futures pointed to further gains in both US and European equities.

South Korea continued to lead global equity markets, with the Kospi climbing 2.9% to extend its position as the world's best-performing major stock index this year.

Samsung jumped more than 5%, taking its quarterly gain above 100%, while SK Hynix extended its April-to-June rally to almost 240% as investors continued to pile into AI-related hardware stocks.

The Yen remained the main focus in Asia, weakening beyond ¥162 per Dollar after breaking through its 2024 intervention low overnight to reach its weakest level since 1986.

While the weaker currency has boosted exporters' earnings and helped drive Japanese equities to record highs, it has also increased import costs, squeezed households and intensified political pressure on the government.

Verbal intervention from Chief Cabinet Secretary Kihara and later comments from Katayama had little immediate effect on the currency's decline.

Brent crude traded around $72.45 a barrel and remained on track for its largest quarterly decline since the pandemic as oil flows through the Strait of Hormuz accelerated following progress on a peace agreement.

Adding to the bearish outlook, Morgan Stanley warned the market could face an oil glut in the coming months.