SK Hynix, Samsung drive record South Korean rally, lift Asia stocks; yen pares gains
Investors renew AI trade bets as the Kospi jumps 17%
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SOUTH Korean stocks posted a record intraday gain after its US$2 trillion rout this week, boosting Asian shares as investors renewed bets on the artificial intelligence trade.
The yen weakened, giving back some intervention-driven gains from Thursday (Jul 30).
The Kospi Index – a bellwether for AI investments – surged to an intraday record of 17 per cent, rebounding from a three-day sell-off.
Chip majors SK Hynix and Samsung Electronics both soared at least 20 per cent. Japan’s Nikkei 225 Stock Average rose more than 5 per cent, sending the regional MSCI Asia-Pacific gauge up by almost 4 per cent.
Among major market moves, the S&P 500 futures rose 0.3 per cent as at 10.42 am Tokyo time.
The Nikkei 225 futures (OSE) rose 5.7 per cent, Japan’s Topix rose 2.2 per cent, Australia’s S&P/ASX 200 rose 0.4 per cent, Hong Kong’s Hang Seng fell 0.9 per cent and the Shanghai Composite rose 0.8 per cent.
The advances in Asia came after an index of chip stocks on Wall Street posted its biggest gain in more than a year.
Amazon.com rose 9.5 per cent after cloud computing revenue accelerated for a fifth straight quarter, while Microsoft surged 16 per cent after earnings, adding roughly US$450 billion to its value, the most by any stock in a single day.
Apple dropped more than 6 per cent in extended trading as supply shortages hurt its sales forecast.
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“Today’s surge reflects investors temporarily switching off the alarm around technology stocks,” said Hebe Chen, a senior market analyst at Vantage Global Prime.
“The earnings have given investors fresh reason to believe the AI demand engine is still running, unleashing bargain hunting and short covering across the names hit hardest.”
In Asia, attention is on the Bank of Japan (BOJ) after the yen posted its biggest gain against the US dollar in more than two years on Thursday, following another round of intervention by authorities.
The central bank announces its policy decision on Friday. The currency weakened 0.7 per cent to 160.57 per US dollar, after surging more than 3 per cent to 157.98 on Thursday.
Thursday’s rally on Wall Street offered a reprieve for technology stocks after the Nasdaq 100 Index logged six straight sessions of losses on concern that the billions of dollars being poured into AI may not generate commensurate returns.
With the US Federal Reserve standing pat and bond yields climbing, traders are also assessing the strength of the US economy and whether a 23 per cent jump in oil prices in July will weigh on inflation.
“Despite near-term volatility, the outlook for US equities remains constructive, supported by strong corporate earnings, ongoing AI adoption, a resilient economy, and favourable financial conditions,” said Sameer Samana at Wells Fargo Investment Institute.
In the US, large gains occurred in shares that, as of the first quarter, had been top holdings of Situational Awareness, the hedge fund led by former OpenAI researcher Leopold Aschenbrenner that earlier sold a big chunk of its holdings to Citadel after liquidating equities caught up in the AI rout.
Elsewhere, a Bloomberg gauge of the US dollar rose, snapping a five-day run of losses.
Treasuries were a touch stronger after long-term yields touched multi-year highs earlier this week, extending the surge unleashed by the Fed decision to hold rates steady despite still-elevated inflation.
The yield on the Treasury 30-year bond slipped two basis points to 5.2 per cent.
Gold traded around US$4,100 an ounce. Oil fell, with Brent crude dropping 1 per cent. The global benchmark is still up by about a fifth in July.
The BOJ is expected to keep rates unchanged on Friday, shifting investors’ attention to whether Governor Kazuo Ueda signals that the next rate increase could come sooner than many economists currently anticipate.
All 52 economists surveyed by Bloomberg forecast the BOJ will hold its benchmark rate steady at the end of a two-day gathering as it assesses the impact of June’s increase to 1 per cent, the highest in 31 years.
That will put the spotlight on updated economic forecasts and Ueda’s press conference in the afternoon and any comments on the currency.
“There is a risk of one or two of the BOJ board voting for back-to-back rate hikes, but we think a turn in USD/JPY really requires the US dollar to top out first,” said Chris Turner, head of currency strategy at ING Groep. BLOOMBERG
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