Following the rise in US tech stocks, South Korean KOSPI surged 3%, SK Hynix rose nearly 6%, and Kioxia gained 8%, as the US-Iran oil tanker attacks pushed up oil prices.

Following the rise in US tech stocks, South Korean KOSPI surged 3%, SK Hynix rose nearly 6%, and Kioxia gained 8%, as the US-Iran oil tanker attacks pushed up oil prices.

Asian-Pacific stock markets rose across the board on Monday, led by South Korean stocks and followed by Japanese stocks, after gains in U.S. technology stocks on Friday boosted market sentiment. Meanwhile, oil prices rose following the tanker attacks between the U.S. and Iran in the Strait of Hormuz, and the escalating tensions in the Middle East added uncertainty to global markets.

On Monday (September 7), the Korea Composite Stock Price Index (Kospi) opened more than 3% higher, with small-cap stocks on the Kosdaq rising 1.33%, chip giant SK Hynix gaining nearly 6%, and Samsung Electronics rising more than 4%.


Japan's Nikkei 225 index rose 2%, the Topix index rose about 0.8%, and Kioxia surged nearly 8%; Australia's S&P/ASX 200 index was basically flat.

In the oil market, Brent crude rose 0.4%, and West Texas Intermediate (WTI) crude rose 0.6% to $92 a barrel. Iran's Islamic Revolutionary Guard Corps Navy claimed responsibility for strikes against several oil tankers and vessels linked to the United States that were transiting unauthorized routes through the Strait of Hormuz, in retaliation for US attacks on Iranian oil tankers. This conflict further diminishes the near-term prospects for a US-Iran ceasefire and exacerbates market concerns about inflation trends.

Inflation and the Federal Reserve: CPI data becomes a key variable

Escalating tensions in the Middle East, coupled with stronger-than-expected US non-farm payroll data last Friday, have increased market bets on a September rate hike by the Federal Reserve. According to Bloomberg, Elias Haddad, global head of market strategy at Brown Brothers Harriman, wrote in a report:

Whether the federal funds rate will be raised on September 16 depends on the U.S. August CPI data released this Friday.

Haddad pointed out that if the CPI data is strong, it will essentially lock in the expectation of a September rate hike and support a stronger dollar; if the data is weak, it will strengthen the reasons for pausing rate hikes, and the dollar will face the risk of being pressured by the Fed's policy expectations turning dovish.

Yen exchange rate: Expectations of a Bank of Japan interest rate hike continue to grow.

The yen rose more than 2% last week, mainly driven by the unwinding of carry trades and rising market expectations of continued interest rate hikes by the Bank of Japan. On Monday morning, the USD/JPY pair traded in a narrow range around 156. Meanwhile, speculation is also growing that the Government Pension Investment Fund of Japan (GPIF) may raise its target allocation for domestic bonds.

According to Bloomberg, a team of Barclays Securities strategists (including Shinichiro Kadota) wrote in a report:

"The market has begun to anticipate that the combined effect of the GPIF reallocation and the Bank of Japan's aggressive tightening policy will be a catalyst for the USD/JPY exchange rate to effectively break below 150 and even fall further."

However, the team also pointed out that "from the current position, the threshold for further significant appreciation of the yen is rising, and its future trend largely depends on whether the Bank of Japan can deliver on the hawkish signals perceived by the market."

In Europe, the far-right Alternative for Germany (AfD) won 44% of the vote in the Saxony-Anhalt state election, a record high, far surpassing the Christian Democratic Union's 17.5%. German government bonds and other European bonds will be closely watched by the market on Monday; the euro was largely unchanged in early trading.

Middle East Situation: US and Iran Attack Each Other, Ceasefire Prospects Dim

According to Bloomberg, the Iranian Islamic Revolutionary Guard Corps Navy posted on social media that it struck three oil tankers traveling through the Strait of Hormuz in an unauthorized manner, as well as several vessels linked to the United States. It also attacked a U.S. Navy drone and a U.S. unmanned surface vessel attempting to enter the strait.

The statement did not disclose further details, nor did it specify whether the vessels in question were hit. According to CCTV News , Rezaei, Secretary of Iran's Supreme National Security Council, stated that Iran will declare a "no-go zone" in the Strait of Hormuz region in the coming days. He indicated that this "no-go zone" will extend from the US naval blockade line into parts of the Persian Gulf.

According to CNBC, U.S. Energy Secretary Chris Wright said in an interview with ABC News' "This Week" that an Iran nuclear deal is unlikely to be reached in the short term.

"There might not be a nuclear agreement at all; instead, their (nuclear weapons development) capabilities might be directly destroyed. An agreement might not be possible until the next Iranian government. We cannot judge at this time."

According to Bloomberg, Wright's remarks suggest that the Trump administration may seek to eliminate Iran's ability to develop nuclear weapons outright without signing a formal agreement.

Analysts believe that this mutual attack occurred more than six months after the US and Israel launched a war against Iran, further demonstrating that the conflict is unlikely to be resolved in the short term and will continue to drive up global energy prices.

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