Asian stocks rallied on continued AI enthusiasm as investors tracked the Trump-Xi summit in Beijing, while the US dollar strengthened on rising Federal Reserve rate hike expectations and safe-haven demand linked to the Iran war.
Asian markets advanced on Thursday as artificial intelligence-driven optimism continued to fuel a rally in technology stocks, while the US dollar strengthened amid rising expectations of Federal Reserve rate hikes and growing safe-haven demand linked to the Iran war.
Investors were also closely watching the ongoing summit between US President Donald Trump and Chinese President Xi Jinping in Beijing, where both sides are discussing trade, technology, Taiwan and the escalating conflict involving Iran.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.2 per cent, remaining close to record highs touched last week as investors continued pouring money into AI-linked semiconductor and technology companies.
Japan’s Nikkei index climbed to another all-time high after strong corporate earnings reinforced expectations that booming global demand for artificial intelligence infrastructure would continue supporting Japanese exporters and chip-related firms.
South Korea’s KOSPI surged 1.7 per cent, taking its gains for 2026 to nearly 88 per cent, making it one of the world’s best-performing major equity benchmarks this year.
Leading the rally was SK Hynix, which moved closer to becoming South Korea’s second trillion-dollar company after Samsung Electronics.
SK Hynix shares have risen more than 200 per cent this year as demand for advanced memory chips used in AI servers and data centres continues to explode globally.
European futures pointed to a firm opening, while US stock futures also edged higher after the S&P 500 and Nasdaq closed at record highs overnight, powered by gains in semiconductor and AI-related stocks.
However, investors remained cautious over geopolitical tensions and inflation risks, particularly as oil prices remained elevated due to the continuing impasse surrounding the Iran conflict and disruptions near the Strait of Hormuz.
Brent crude traded
above $105 a barrel on Thursday, while US West Texas Intermediate crude remained above $101 a barrel, keeping concerns alive over rising global energy costs and inflationary pressures.
The dollar meanwhile drew support from both higher US Treasury yields and safe-haven flows as traders increasingly bet that the Federal Reserve may need to raise interest rates again this year.
The dollar index, which measures the US currency against six major peers, stood at 98.46 and was on track for a weekly gain of 0.63 per cent.
The euro traded near a one-week low at $1.1716 and was headed for its largest weekly decline in two months, while the British pound slipped to $1.3527 amid domestic political uncertainty in the UK.
Against the Japanese yen, the dollar was little changed at 157.83, with traders remaining alert for possible intervention by Japanese authorities to support the weakening currency.
The Chinese yuan held near a more than three-year high ahead of the Trump-Xi meeting, with the offshore yuan trading around 6.7860 per dollar.
The strengthening dollar followed another round of strong US inflation data this week.
US producer prices posted their largest monthly increase in four years in April, following data earlier in the week showing consumer inflation accelerated to its fastest annual pace in three years.
The hotter inflation readings have sharply shifted market expectations for US monetary policy.
Markets are now pricing in nearly a 32 per cent chance of a Federal Reserve rate hike in December, almost double the probability seen a week ago, according to CME FedWatch data.
First Published:
May 14, 2026, 07:39 IST
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