AI Boom Offsets Gulf Tensions

Asian share markets experienced a mixed day, primarily driven by the ongoing boom in AI-related demand, which propelled indices like Japan's Nikkei 225, South Korea's KOSPI, and Taiwan's stock market to significant gains. This positive sentiment in the technology sector is partially offset by escalating geopolitical tensions in the Middle East. A lack of progress in peace talks between the United States and Iran, coupled with threats from the United States to restart attacks on Iran, has challenged optimism regarding the re-opening of the Strait of Hormuz. Additionally, an Israeli push into Lebanon against the Iranian-backed Hezbollah militant group further exacerbated regional instability. These tensions have led to a notable increase in oil prices for Brent Crude and West Texas Intermediate, raising concerns about inflation. In response, bond markets are showing signs of strain, and there's a 50-50 chance the United States — Federal Reserve may hike interest rates by year-end. Upcoming U.S. economic data, including the ISM survey and May payrolls report, along with speeches from United States — Federal Reserve members, are keenly awaited by investors. The United States remains broadly steady, while the Japan — Japanese yen and Europe are weakened due to their reliance on energy imports. Gold prices remained largely unchanged, offering little support as a safe haven or inflation hedge.