Asian Stocks Advance on AI Boost, But Oil Surge May Give Dalal Street A Cautious Start

Mumbai, June 1:Asian equities traded higher on Monday, extending the global risk-on mood driven by optimism around artificial intelligence-related investments, even as investors remained alert to escalating tensions in the Middle East and a sharp rise in crude oil prices.

Japan’s Nikkei 225 gained around 1%, South Korea’s Kospi climbed more than 4%, while Taiwan’s benchmark index rose 1.8%. Technology and semiconductor stocks continued to attract buying interest as investors bet on sustained demand for AI infrastructure and advanced chips. Market participants are also looking ahead to announcements from major technology companies at Taiwan’s Computex conference, which is expected to provide fresh insights into the pace of AI spending.

Hing Kong’s Hang Seng rose 0.6% while MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.6%. The gains across Asia reflected confidence that the AI investment cycle remains intact despite concerns over global growth and geopolitical risks.

Wall Street Ends at Fresh Records

The positive sentiment in Asia followed another strong session on Wall Street on Friday, where all three major U.S. benchmarks closed at record highs.

The Dow Jones Industrial Average rose 0.72%, while the S&P 500 and Nasdaq Composite gained 0.22% and 0.21%, respectively. Technology shares once again led the advance after Dell Technologies delivered a stronger-than-expected outlook, reinforcing investor confidence in the AI trade.

Dell shares surged nearly 33%, helping lift broader technology stocks. Investors continued to favour companies expected to benefit from growing demand for data centres, cloud computing and AI-related infrastructure.

The latest gains have reinforced expectations that technology will remain the primary driver of U.S. equity market performance in the near term.

Futures Signal Cautious Global Trade

While Asian markets traded firmly higher, U.S. stock futures were more measured in their advance.

Dow futures rose 0.7%, S&P 500 futures inched up 0.3% while Nasdaq futures rose 0.5%.

Investors remain focused on diplomatic developments involving Iran and the United States, as well as the broader security situation in the Middle East, which could influence commodity prices and risk appetite globally.

Oil Jumps on Middle East Tensions

Crude oil prices emerged as the key market variable at the start of the week.

Brent crude climbed above $93 a barrel after Israel expanded military operations in Lebanon, raising fears of wider regional instability. Concerns over possible disruptions to energy supplies intensified following reports that Iran had deployed additional naval mines near the Strait of Hormuz, one of the world’s most critical shipping routes for oil.

The rise in crude prices outweighed concerns about slowing economic activity in China and prompted investors to reassess inflation risks.

What It Means for Indian Markets

For Indian equities, global cues present a mixed picture. On one hand, record highs on Wall Street and gains across Asian markets could provide support to investor sentiment at the opening bell.

On the other hand, the sharp rise in crude oil prices could limit upside for domestic indices. Higher oil prices are generally viewed as negative for India, which imports the majority of its energy requirements, as they can increase inflationary pressures and widen the trade deficit.

The overall setup suggests Indian markets could witness a cautious-to-flat start, with positive global equity cues offset by concerns over rising crude prices. Investors are likely to keep a close eye on oil movements and geopolitical developments for further direction through the trading session.

Source:

• Exchanges