SK Hynix Revives the AI Trade as the RBNZ Surprises With a Hold
Wednesday, 28 October 2026 — Asian technology shares rallied after SK Hynix's blowout earnings drew investors back into the AI trade.
Our five themes for the day:
First, the RBNZ's surprise hold. The committee kept the cash rate at 2.75% in a 4-3 vote, when only two of 25 economists surveyed by Bloomberg expected a hold and markets had priced a 95% chance of a hike. Governor Anna Breman still sees further increases as highly likely, and the RBNZ expects inflation to rise to 4.4% in the fourth quarter. In our view, the hold buys time before next month's election, but it leaves December live, and markets already price an 85% probability of a rise then.
Then oil. Brent rose 1.5% to $115.64 a barrel after the Wall Street Journal reported that the US told Gulf countries to prepare for a short, intense military campaign against Iran after the midterms. The American Petroleum Institute is said to have reported a 2.031 million-barrel draw in US crude stocks last week, against an expected build of 800,000 barrels, and flows through the Strait of Hormuz are running at about 54% of pre-war levels, according to Kpler. In our view, a second draw in the official data at 15:30 CET could confirm that inventories leave little room to absorb a new disruption.
Third, the AI rally. SK Hynix's operating profit rose sevenfold to 83.3 trillion won in the September quarter, the company will return a further 60 trillion won to shareholders, and it expects memory shortages to last until at least 2030. The Kospi climbed 6%. At the same time, Broadcom's chief executive had to accept higher interest rates to secure $63 billion of financing for Anthropic's chip leases. In our view, demand for AI hardware is not the question; Microsoft's and Alphabet's results after the close tonight have to show that the spending pays for itself.
Fourth, the US consumer. The Conference Board's consumer confidence index jumped to 91.7 in October from an upwardly revised 84.2, well above the 81 consensus. The share of Americans saying jobs are plentiful rose to 26.7% from 24.3%, while the share saying jobs are hard to get held at 21.4%, so the labour differential improved. In our view, a firmer job market as consumers see it could make it easier for Chairman Warsh to keep a December hike in play tonight.
Last but not least, the policy split between Australia and New Zealand. Australia's trimmed mean inflation rose to 3.7% y/y in the third quarter, above the 3.6% consensus, and Governor Bullock told senators that upside risks to inflation are materialising. Markets price an 86% probability of an RBA hike on 3 November. The New Zealand dollar slid as much as 1.9% against the Australian dollar, its biggest intraday drop since October 2017, according to Bloomberg.
Chart of the day
Australia's CPI and trimmed mean inflation against the RBA's forecasts, year on year
In brief
The RBNZ unexpectedly held its cash rate in a split vote, and the New Zealand dollar slid the most against the Australian dollar since 2017.
Australia's core inflation beat estimates, and Governor Bullock warned of upside risks, lifting the odds of an RBA hike next week.
SK Hynix's profit jumped sevenfold, and it raised shareholder returns, lifting Asian chip stocks and the Kospi.
Oil rose after a report that the US told Gulf states to prepare for a short, intense campaign against Iran after the midterms.
Traders have built bullish Treasury positions before the Fed, leaving them exposed to hawkish guidance tonight.
Israel's election is too close to call, with Netanyahu's and Eisenkot's blocs level in exit polls.
Today's Macro Roadmap: UK Chancellor John Healey presents his budget at 13:30 CET, the Bank of Canada decides at 14:45 CET, the EIA's oil inventories follow at 15:30 CET, the Fed decides at 19:00 CET, and Alphabet and Microsoft report after the US close.
The full briefing
Asian technology shares rallied after SK Hynix's blowout earnings drew investors back into the AI trade, and Nasdaq 100 futures rose 0.4% to 29,932 ahead of results from Alphabet and Microsoft and the Fed decision tonight (BBG). S&P 500 futures were little changed at 7,760, and Dow Jones futures fell 0.2% to 52,457. Contracts pointed to a modest loss for European shares at the open (BBG). The RBNZ unexpectedly held its cash rate, and the New Zealand dollar slid (BBG). Brent rose 1.5% to $115.64 a barrel after the US reportedly told Gulf countries to prepare for a short, intense military campaign against Iran after the midterm elections (WSJ).
Stocks
In stocks, the Kospi climbed 6% and was set for its biggest rally in three months. SK Hynix jumped 10% and Samsung Electronics 8.3%, lifting the MSCI Asia Pacific Index by 1.1% (BBG). SK Hynix's September-quarter operating profit rose sevenfold to 83.3 trillion won ($62.5 billion), more than 7% above estimates, and the memory maker will return a further 60 trillion won to shareholders on top of 40 trillion won already announced (BBG). It has sold out of memory until 2029 and expects shortages to last until at least 2030 (BBG). Nikkei 225 futures rose 1.1% to 64,180, Japan's Kioxia jumped as much as 16% (BBG), Hang Seng futures rose 0.3% to 23,101, and CSI 300 futures fell 0.1% to 4,045. Meta's $25 billion share sale drew demand for about five times the shares on offer (BBG), and Broadcom's chief executive accepted higher interest rates to seal a $63 billion debt deal that lets Anthropic lease AI chips (WSJ). Anthropic picked JPMorgan to lead US sales of its IPO shares to individual investors, and OpenAI intends to buy AI chips from Google (BBG). A Bloomberg Intelligence report says China is on track to lead in large language models by 2030 (BBG).
The RBNZ kept its cash rate at 2.75% in a 4-3 vote. Only two of 25 economists surveyed by Bloomberg had expected a hold, and markets had priced a 95% chance of a hike (BBG). Three members preferred a 25 basis point increase. Governor Anna Breman said further increases are highly likely at coming meetings, and the RBNZ sees inflation rising to 4.4% in the fourth quarter from 3.7% (BBG). In Australia, Governor Michele Bullock told a Senate committee that upside risks to inflation have materialised or are materialising (BBG), and the odds of an RBA hike on 3 November rose to almost 90% after the inflation data (BBG). Australian banks are loosening mortgage rules as home prices in the major cities fell 4.3% in the third quarter, the fastest drop since records began in 1980 (BBG). In Japan, UA Zensen will again seek a 6% pay rise for 2027 (BBG). Euro-area banks tightened credit standards and saw weaker loan demand in the third quarter, the ECB's lending survey showed on the eve of its meeting (BBG). A Reuters poll shows economists expect high inflation to persist globally into next year (Reuters).
The US
In the US, the Fed is expected to keep its target range unchanged at 19:00 CET. Investors have built the largest net long position in Treasuries since 8 September, and swaps price roughly a 7% chance of a hike today but more than 90% for December, so hawkish guidance from Chairman Kevin Warsh could reverse those bets (BBG). Former Dallas Fed President Robert Kaplan said the Fed can afford to wait one meeting before raising rates (BBG). Rates may simply be normal at today's level, as the New York Fed's ACM model expects short-term rates to average 4.3% over the next decade (WSJ).
What's priced for central banks?
Currently, short-term interest rate (STIR) traders price a 9% probability of a Fed rate rise today and 23 basis points of tightening by December. For the ECB, they price a 3% probability of a rate rise on Thursday and 21 basis points by December, and for the BoJ a 1% probability on Friday and 21 basis points by December. They price a 94% probability of a BoE rate rise in November and 36 basis points by December, an 86% probability of an RBA rate rise on 3 November and 26 basis points by December, and an 82% probability of a Bank of Canada rate rise today and 37 basis points by December. After its hold, they price an 85% probability of an RBNZ rate rise in December and 21 basis points of tightening.
Currencies
In currencies, the New Zealand dollar fell 1.3% to 0.5606 US dollars, and it slid as much as 1.9% against the Australian dollar to its weakest since March 2013 (BBG). The Australian dollar rose 0.1% to 0.7032 US dollars. The dollar index rose 0.1% to 102.44, and a Bloomberg gauge of the dollar headed for a fourth day of gains (BBG). The yen firmed 0.1% to 157.86 per dollar, the euro eased 0.1% to 1.1118 dollars, and sterling eased 0.1% to 1.3289 dollars. Strategists expect G10 currency volatility to rise and stay elevated as the dollar strengthens, an unfavourable backdrop for carry trades (BBG), although the yen's role as a funding currency for Latin American carry trades has withstood Brazil's rout (BBG). In Japan, hackers who attacked the GMO currency-trading platform demanded $50 million, and Finance Minister Satsuki Katayama vowed an urgent response (BBG).
Bonds
In bonds, Treasuries slipped before the Fed. The ten-year yield rose 2.5 basis points to 5.02%, the two-year 1.5 basis points to 4.75%, and the thirty-year 2.0 basis points to 5.33%. New Zealand's two-year yield fell 12 basis points to 3.82% after the RBNZ's hold (BBG). Countries most aligned with the US bought a net $174.3 billion of Treasuries in the first eight months of the year, down more than 60% from a year earlier (BBG). Investors doubt that gridlock after the 3 November midterms would curb deficits running at roughly 6% of GDP (BBG). The Pentagon puts the cost of the Iran war at more than $47 billion, according to Reuters (Yahoo). Japan's ten-year yield rose 1.7 basis points to 2.83%, and Japanese life insurers plan to swap into higher-yielding bonds after super-long yields hit multi-decade highs (BBG). China's governments will probably raise at least a net 2.2 trillion yuan in bond sales in the final two months of the year, and the ten-year yield is near a record low at 1.62% (BBG). Private-equity-backed companies face about $300 billion of below-investment-grade debt maturing from 2028 (WSJ).
Commodities
In commodities, Brent rose 1.5% to $115.64 a barrel and WTI 1.5% to $101.43, snapping a two-day decline (BBG) after both fell about 2% on Tuesday as mediators sought to revive US-Iran talks (WSJ) (CNBC). Oil had gained in Asia after Saudi Arabia contained a fire near its Ras Tanura export terminal (WSJ), which Yemen's Houthis said they hit with a ballistic missile (Reuters). The American Petroleum Institute reported a 2.031 million-barrel draw in US crude stocks last week, against an expected build of 800,000 barrels (Tradingeconomics). Flows through the Strait of Hormuz are running at about 54% of pre-war levels, according to Kpler (WSJ), and global inventories have fallen by around 500 million barrels since February (CNBC). OPEC+ is likely to keep its output targets steady at Sunday's meeting (Reuters), and traders expect Russia's oil exports through its western ports to fall in November (Reuters). A Bloomberg Opinion column argues the US-Iran deadlock could become a lasting stalemate (BBG). US consumers have paid an average of $471 more for fuel since the war began, a study finds (Reuters). Gold fell 0.8% to $4,029 an ounce, and copper was little changed. Bitcoin rose 0.2% to $80,817, and Ether rose 0.4% to $2,351.
Geopolitics
In geopolitics, Prime Minister Benjamin Netanyahu and opposition leader Gadi Eisenkot are neck and neck, with both blocs on track for 51 of the Knesset's 120 seats according to exit polls (BBG) (Reuters). Netanyahu said he and President Trump would remove the threat from Iran. Iran's Supreme Leader restated his conditions for ending the war, including an end to the US naval blockade, as regional mediators sought to avert new strikes (BBG). The UN nuclear watchdog said it has seen no sign that Iran has repaired its bombed nuclear sites, but it cannot verify the status of 440 kilograms of highly enriched uranium (BBG). In Brazil, Senator Flávio Bolsonaro left for the US after losing Sunday's presidential election (Nbcnews). President Trump's approval rose from a record low ahead of the midterms, a Reuters/Ipsos poll shows (Reuters).
Corporate news
In corporate news, Boeing fell to an 18-month low after cutting its delivery target for the year, though its free cash flow beat estimates (BBG). Jio Platforms surged 21% on its trading debut in India (BBG).
Research trade ideas
Barclays strategists see no value in chasing global carry trades and warn that emerging-market currencies are likely to reprice (BBG).
Data and the day ahead
Data and the day ahead: Australia's consumer prices rose 1.3% q/q in the third quarter, above the 1.2% consensus, after 0.6% in the second, and the trimmed mean rose 3.7% y/y, above the 3.6% expected (BBG). Yesterday, the Conference Board's consumer confidence index jumped to 91.7 in October from an upwardly revised 84.2, well above the 81 consensus. Swiss residential property prices rose 1.7% q/q in the third quarter (BBG). Still to come: UK Chancellor John Healey presents his budget at 13:30 CET, and ECB chief economist Philip Lane speaks in Berlin at 14:20 CET. The Bank of Canada decides at 14:45 CET, with consensus for a quarter-point rise, and the EIA's weekly oil inventories follow at 15:30 CET. The Fed decides at 19:00 CET (you can find our preview here), and Alphabet and Microsoft report after the US close (BBG). Samsung reports on Thursday (BBG), when the ECB decides, followed by the BoJ on Friday (BBG).
Time Stamp: 28 October 2026, 07:10 CET
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Tags: RBNZ surprise hold, Australia inflation, SK Hynix earnings, Oil and Iran, US consumer confidence, Fed decision, Bank of Canada decision, New Zealand dollar