South Korea’s Kospi drops as Asian stocks dip after US tech rally; yen steadies
The MSCI Asia Pacific Index slips 0.6% as advancers outnumber decliners
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[SINGAPORE] Asian stocks failed to follow Wall Street’s tech-led rally as doubts about the artificial intelligence trade resurfaced after a volatile month while the yen steadied after its intervention-led gains.
South Korea’s Kospi Index dropped as much as 1.9 per cent, with chipmakers SK Hynix and Samsung Electronics among the losers.
The broader MSCI Asia Pacific Index fell 0.6 per cent, although advancers narrowly outnumbered decliners. Earlier, the S&P 500 Index climbed 1.5 per cent on Monday (Aug 3), finishing within striking distance of a record.
Among the main market moves, S&P 500 futures were little changed as at 9.46 am Tokyo time. The Hang Seng futures were little changed while Japan’s Topix fell 0.3 per cent and Australia’s S&P/ASX 200 rose 0.4 per cent.
Equity-index futures for the Nasdaq 100 Index erased earlier gains to trade little changed, losing momentum after a Wall Street rally that saw a gauge of megacaps post its best day since March.
Palantir Technologies jumped 14 per cent in extended trading after raising revenue and income forecasts. However, Amazon shares fell as much as 1.9 per cent in post-market trading after chair Jeff Bezos filed to sell shares.
The yen steadied following a sharp advance on Monday that fuelled speculation authorities may have intervened to support the currency again, building on last week’s coordinated action by the US and Japan. The currency traded at 157.40 per US dollar.
Monday’s revival in US technology shares offered investors some relief, even as uncertainty in the Middle East and lofty AI valuations kept caution elevated.
The next test comes with another busy week of corporate earnings, as investors look for evidence that heavy spending on AI is translating into stronger growth and profits.
“Earnings will remain the primary focus, with roughly 15 per cent of the S&P 500 by market capitalisation scheduled to report,” said Matt Orton, chief market strategist at Raymond James Investment Management.
Elsewhere, oil was steady after its biggest drop in a week, as US President Donald Trump said his latest offer of talks is Teheran’s “last chance” and that he expects a full reopening of the Strait of Hormuz.
Brent edged up 0.5 per cent to about US$84.10 a barrel after a slump on Monday.
Treasuries held their gains from the previous session, when declining oil eased inflation concerns. The yield on the 10-year bond was little changed at 4.68 per cent. Gold edged up to about US$4,060 an ounce.
In the US, of the 307 S&P 500 companies that have reported so far this season through Friday, 86 per cent beat analysts’ forecasts for earnings per share. On sales, 68 per cent of companies have positively surprised, while 15 per cent missed.
SpaceX’s inaugural report as a public company is due on Tuesday. It has also set the stage for one of the largest share unlocks in capital markets history, with as much as US$116 billion worth of stock becoming eligible for sale for the first time in September.
Elon Musk’s company has fallen below its initial public offering price, closing on Monday at US$114.46.
Still, the on-again, off-again nature of US-Iran diplomacy may mean earnings and jobs data will have to do the heavy lifting for the bulls this week, according to Chris Larkin at E*Trade from Morgan Stanley.
In the countdown to a slew of jobs figures, data showed US manufacturing activity expanded in July at the fastest pace in more than four years as demand remained strong, production surged and firms added workers.
Forces that propelled US stocks to record highs this year remain “firmly intact” after a reset in retail investors’ speculative trading, according to Citadel Securities’s Scott Rubner.
“Markets are transitioning from a flow-driven environment back to one increasingly dictated by earnings, corporate demand, and the macroeconomic backdrop,” he wrote. BLOOMBERG
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