HONG KONG — The war that had been priced into every semiconductor stock on the continent came off the screens before lunch in Tokyo on Monday, and the money that had spent a month in hiding rushed straight back into the names it had abandoned.
SoftBank Group, the most leveraged bet on the artificial intelligence trade on any Asian exchange, jumped as much as 12 percent. Taiwan Semiconductor Manufacturing Co., the company that actually prints the chips those bets depend on, rose 2.8 percent. The gains were outsized. The reason was not. A war was ending.
Washington and Tehran confirmed over the weekend that they would halt the conflict the United States and Israel had been waging against Iran, and the wording of the agreement reached trading desks as relief more than as news. Stocks across the Asia Pacific had spent the back half of last week climbing on signals that a deal was close. Confirmation turned that tentative bounce into the broadest risk-on session the region had seen since the spring.
What moved was not earnings, not guidance, not any fresh fact about the companies themselves. It was the removal of the one variable that had hung over the chip and AI trade for weeks. The war had threatened the single thing capable of breaking the rally, an oil shock feeding back into inflation, and its end took that threat off the table in a weekend.
The numbers were loud. Japan’s Nikkei 225 climbed 5.5 percent, South Korea’s Kospi 5.7 percent, Taiwan’s Taiex 2.7 percent and Australia’s ASX 200 1.5 percent. The sharpest moves clustered exactly where the war had cut deepest. Tokyo Electron, which builds the machines that make chips, rose more than 9 percent. Advantest gained almost 8 percent. In Seoul, SK Hynix added 6.4 percent and Samsung Electronics 4.7 percent, while in Taipei Hon Hai Precision, the Foxconn that assembles much of the world’s hardware, rose 2.7 percent. SoftBank had been at the center of the opposite move only last week, when Iranian strikes drove Asian markets into a four-front retreat.
The engine under all of it was crude. Brent fell 4.5 percent to below $83.40 a barrel, unwinding the premium that fear of a closed Strait of Hormuz had built into the price. The terms explain the drop. Under the agreement the strait reopens to toll-free passage, the US naval blockade of Iranian ports is lifted, sanctions on Iranian oil sales are suspended and roughly $24 billion in frozen Iranian assets is released, Al Jazeera reported. Iran got the substance of the deal, and the oil market got its barrels back.
Lower oil is the quiet hinge of the session. An oil-driven inflation scare had been the main force capping the AI trade that carried the Nasdaq to record highs earlier this month. Remove the scare and the cap lifts. US futures registered it within minutes, contracts on the S&P 500 up about 1 percent and the tech-heavy Nasdaq up around 1.8 percent ahead of the New York open.
The read on the desks was that confirmation, not the deal itself, did the work. Khoon Goh, head of Asia research at ANZ, noted that markets had already moved late last week when Washington signaled a deal was near, and that the actual confirmation only spurred a further leg higher. The most leveraged and most heavily war-sold names led precisely because the move was mechanical, a covering of positions taken against a war that was no longer coming.
For the AI complex the link runs through cost. The build-out that has defined the last two years, the data centers, the high-bandwidth memory, the networking, runs on cheap and predictable energy, and a war astride the world’s most important oil chokepoint is the opposite of predictable. SK Hynix and Samsung, the two suppliers of the memory that trains the largest models, are leveraged to that arithmetic as directly as any names in the index, which is why a deal due to be signed in a Swiss city on Friday showed up first in Seoul on Monday morning.
The pattern is familiar. In April the bare signal that Iran might reopen the Strait of Hormuz was enough to send oil crashing and the Dow soaring in a single afternoon. Monday was that same trade at larger scale, with a finalized document behind it rather than a rumor.
None of which makes the peace real yet. The wording of a memorandum of understanding has been finalized, Iran’s Supreme National Security Council said, but a memorandum is not a treaty, and the signing is not scheduled until a ceremony in Switzerland on Friday. Five days is a long time to hold a ceasefire that is meant to halt fighting on every front, Lebanon included. The market knows it. Hong Kong’s Hang Seng told the cautious version of the day, opening up around 1 percent and then surrendering most of the gain before the close.
That gap, between a rally and a signature, is the part no screen can price. SoftBank’s 12 percent and the rush back into chip names, a move CNBC reported was among the company’s largest in months, amount to a bet that the wording survives the week. If it does, the war premium that drained out of oil and back into chips on Monday stays out. If it does not, the same leverage that carried the rally up is sitting there to carry it back down. The market has chosen its direction. It has not been told yet whether it chose right.
