Asian Equities Drop Led by Kospi, Oil Extends Gain: Markets Wrap
(Bloomberg) — Asian stocks declined as fresh selling in semiconductor stocks renewed concerns over the sustainability of the artificial intelligence trade. Crude oil climbed.
South Korea’s Kospi Index — a bellwether for artificial intelligence investments — slid more than 6% with SK Hynix Inc. and Samsung Electronics Co. contributing most to the declines. Kioxia Holdings Corp. tumbled more than 13% in Tokyo. The selloff dragged MSCI’s Asia Pacific equities gauge down 1.5%, snapping a two-day advance.
Meanwhile, South Korea’s Financial Services Commission head said the country will soon announce measures regarding the controversy over leveraged ETFs linked to Samsung and SK Hynix fueling stock market volatility.
Brent crude rose for a fourth day to above $85.25 a barrel after the US launched fresh airstrikes on Iran, adding to concern that escalating Middle East tensions will further disrupt energy supplies.
The durability of the AI rally remains in focus as investors assess whether strong earnings can justify lofty chip-sector valuations after weeks of volatile trading. Meanwhile, while inflation reports this week eased concerns over near-term Federal Reserve hikes, the escalating conflict in the Persian Gulf has revived fears over energy supplies from the region.
“There’s no near-term pressure on the Fed, but oil is in the driver’s seat over the longer term,” said David Russell at TradeStation. “Energy saved the day in June, but that might become ancient history if the Strait of Hormuz doesn’t open soon.”
In other corners of the market, Australian and New Zealand government bonds advanced after softer-than-expected US producer price inflation for June drove a Treasuries rally on Wednesday and prompted traders to further scale back expectations for Fed rate increases this year.
The chip sector remained in focus after a volatile month.
After months of outsized gains in stock prices, investors are demanding stronger evidence that surging capital spending on AI will translate into sustained earnings growth across the semiconductor supply chain.
After ASML Holding NV — a linchpin in the semiconductor supply chain — lifted its annual sales forecast for the second time this year, investors will look to Taiwan Semiconductor Manufacturing Co.’s earnings later Thursday for a fresh read on the AI buildout.
ASML also plans to raise prices, the Information reported, citing four unidentified people with knowledge of the discussions.
What Bloomberg Strategists say…
“The market’s lukewarm reaction to ASML’s blowout report deepens a troubling trend in which stellar preliminary results from Samsung Electronics and robust sales figures from TSMC have so far failed to provide a floor for the increasingly fragile chip rally. TSMC’s earnings later today will serve as the next crucial test for the market. As Asia’s most valuable company, TSMC faces an exceptionally high bar to turn broader regional sentiment around.”
— David Savage, Macro Squawk. Click here for the full analysis.
In geopolitical news, the US-Iran interim peace deal signed around a month ago has all but collapsed over the past week as the two sides feud over control of the vital strait, through which Saudi Arabia, Qatar, the United Arab Emirates and others send most of their energy exports.
The latest attacks come as US President Donald Trump pledged to intensify the bombardment until Tehran stops attacking ships in the Strait of Hormuz and agrees to open the waterway.
Corporate Highlights:
Anthropic PBC is seeking to meet with investors ahead of its potential mega-IPO, according to people familiar with the matter. Apple Inc. received long-awaited government approval to roll out Apple Intelligence in China, potentially giving it a boost in the world’s most-competitive smartphone market. Morgan Stanley’s stock traders sailed past Wall Street’s expectations to set another quarterly record, adding to the industry’s second-quarter windfall from buoyant markets and ongoing volatility. PayPal Holdings Inc. has been working with advisers to review strategic options, people familiar with the matter said, as Stripe Inc. and private equity firm Advent pursue a $50 billion-plus takeover of the fintech pioneer. Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 9:47 a.m. Tokyo time Hang Seng futures rose 0.7% Nikkei 225 futures (OSE) fell 3.1% Japan’s Topix fell 1.2% Australia’s S&P/ASX 200 was little changed Euro Stoxx 50 futures were little changed Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1469 The Japanese yen was little changed at 162.08 per dollar The offshore yuan was little changed at 6.7659 per dollar Cryptocurrencies
Bitcoin fell 0.7% to $64,508.82 Ether fell 0.5% to $1,912.28 Bonds
The yield on 10-year Treasuries advanced one basis point to 4.56% Japan’s 10-year yield advanced one basis point to 2.695% Australia’s 10-year yield declined one basis point to 4.89% Commodities
West Texas Intermediate crude rose 0.6% to $80.11 a barrel Spot gold was little changed This story was produced with the assistance of Bloomberg Automation.
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