Asian Stocks Rally, Yen Falls as BOJ Stands Pat: Markets Wrap

(Bloomberg) — Asian stocks rallied after South Korean equities posted a record intraday gain, as investors renewed bets on the artificial intelligence trade following this week’s rout. The yen weakened, giving back some of Thursday’s intervention-driven gains.

The Kospi Index — a bellwether for AI investments — surged as much as 17%, the biggest intraday advance on record, rebounding from a three-day selloff. Chipmakers SK Hynix Inc. and Samsung Electronics Co. both jumped about 20%. Japan’s Nikkei 225 Stock Average gained more than 4%, lifting the MSCI Asia Pacific Index 3.6%, while the emerging-markets benchmark climbed the most since April.

In Japan, the yen held its losses as the Bank of Japan kept its policy rate unchanged. The currency had posted its biggest gain against the dollar in more than two years on Thursday, following another round of intervention by authorities. The currency weakened 0.7% to 160.72 per dollar, after surging more than 3% to 157.98 on Thursday.

Meanwhile, the advances in Asian stocks came after an index of chip stocks on Wall Street posted its biggest gain in more than a year. Amazon.com Inc. rose 9.5% after cloud-computing revenue accelerated for a fifth straight quarter, while Microsoft Corp. surged 16% after earnings. Apple Inc., however, dropped more than 6% in extended trading as supply shortages hurt its sales forecast.

“Markets are seeing strong buying after stocks had been pushed lower by leveraged bets, away from fundamentals,” said Hiroki Takei, a strategist at Resona Holdings Inc. “Robust earnings from Microsoft and Amazon have also given investors greater confidence that the massive investments in AI can ultimately be recouped.”

The rebound in technology stocks offered investors a reprieve after this week’s selloff, driven by concern that the billions of dollars being poured into AI may not generate commensurate returns. With the Federal Reserve standing pat and bond yields climbing, traders are assessing the strength of the US economy and whether a 23% jump in oil prices this month will weigh on inflation.

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.

The Nasdaq 100 Index climbed over 3%, snapping a six-day losing streak. Futures contracts for the tech-heavy gauge added 0.6%.

“The hardest job for investors now is figuring out whether this is a sustained recovery, or just a ‘dead cat bounce,”’ said Vey-Sern Ling, managing director at Union Bancaire Privee.

What Bloomberg’s Strategists Say…

The rally across Asian tech sectors on Friday is so extreme it offers a burning ray of hope at the end of a very rough July for sentiment across the region. The rallies will feed the narrative that a clear-out of leveraged positions sets up a cleaner floor for a sustained, and possibly steadier rally going forward.

– Garfield Reynolds, Markets Live team leader. For more on the analysis, click here.

Elsewhere, a Bloomberg gauge of the dollar rose, snapping a five-day run of losses.

Treasuries were a touch stronger after long-term yields touched multiyear 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 5.19%.

Gold traded around $4,100 an ounce. Oil fell, with Brent crude dropping 1%. The global benchmark is still up by about a fifth this month.

That said, early attention in Asia was on the BOJ. 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 last month’s increase to 1%, the highest in 31 years.

Spotlight now shifts to Governor Kazuo Ueda’s press conference in the afternoon and any comments on the currency.

Corporate Highlights:

Tesla executives have been told to prepare for a separation of the China business ahead of a potential merger, a person familiar with those talks said, the Wall Street Journal reported. Meta Platforms Inc. said it has already committed almost $700 billion in future spending, through long- and short-term agreements, related to AI data centers, cloud computing and more. Oracle Corp. said it would expand a partnership with Google Cloud to bring Gemini AI tools to its business customers. Qualcomm Inc. Chief Executive Officer Cristiano Amon said demand for smartphones remains strong, but the growing costs of making the devices are keeping the market down. Anthropic PBC announced that its AI models had breached three different organizations during cybersecurity tests that went awry, a little more than a week after its chief rival, OpenAI, disclosed a similar incident. China’s DeepSeek is planning a massive artificial-intelligence data center in Inner Mongolia, according to people familiar with the matter. Sony Group Corp. raised its profit outlook after its lucrative content holdings generated continued growth, underscoring the entertainment group’s resilience in the face of rising component prices. Some of the main moves in markets:

Stocks

S&P 500 futures rose 0.2% as of 12:15 p.m. Tokyo time Japan’s Topix rose 1.5% Australia’s S&P/ASX 200 rose 0.4% Hong Kong’s Hang Seng fell 0.3% The Shanghai Composite rose 0.5% Euro Stoxx 50 futures rose 0.5% Currencies

The Bloomberg Dollar Spot Index rose 0.3% The euro fell 0.1% to $1.1511 The Japanese yen fell 0.8% to 160.75 per dollar The offshore yuan was little changed at 6.7466 per dollar Cryptocurrencies

Bitcoin fell 0.8% to $64,191.98 Ether fell 1% to $1,900.18 Bonds

The yield on 10-year Treasuries declined two basis points to 4.65% Japan’s 10-year yield was unchanged at 2.800% Australia’s 10-year yield declined seven basis points to 4.93% Commodities

West Texas Intermediate crude fell 1.6% to $82.23 a barrel Spot gold fell 0.7% to $4,073.65 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Winnie Hsu, Ruth Carson and Momoka Yokoyama.

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