Tech Stocks Rally as Korea Surges, Yen Pares Gain: Markets Wrap
(Bloomberg) — A global rally in technology stocks gathered momentum as South Korean equities posted a record jump, with investors returning to the artificial intelligence trade after this week’s rout. The yen weakened, giving back some of its intervention-driven gains.
The Kospi Index surged as much as 18%, rebounding from a three-day selloff. Heavyweight chipmaker SK Hynix Inc. climbed by the 30% daily limit, and Samsung Electronics Co. rose as much as 27% — making the two companies the biggest contributors to the MSCI Asia Pacific equities gauge.
The Asian gains followed the biggest rally in Wall Street chip stocks in more than a year. Nasdaq 100 futures pointed to further advances after the tech-heavy gauge snapped a six-day losing streak. Amazon.com Inc. jumped 9.5% in post-market trading after strong earnings buoyed sentiment, though Apple Inc. fell more than 6% after supply shortages weighed on its sales forecast.
The yen’s decline saw it retrace some of Thursday’s biggest gain against the dollar in more than two years, following another round of intervention by authorities. The currency extended losses after the Bank of Japan left interest rates unchanged, as economists forecast. Treasuries rose as oil extended declines.
The rebound in chipmakers 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 policy decision under new chair Kevin Warsh now behind them, investors are turning their attention to whether the recovery can be sustained after a mixed set of earnings from several megacap companies.
“I am betting against the sustainability of the rally as the backdrop created by Warsh is not conducive to stable markets,” said Matthew Haupt, a hedge fund manager at Wilson Asset Management. “There are too many unresolved questions for a sustainable rally to take hold.”
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 earlier sold a big chunk of its holdings to Citadel after liquidating equities caught up in the AI rout.
The Nasdaq 100 Index climbed more than 3% Thursday, snapping a six-day losing streak. Futures contracts for the gauge were up 1.2% in Asian trade.
Futures also indicated further gains for the S&P 500 Index and European shares after MSCI’s Asia Pacific equities gauge climbed 4.2%. A gauge of Asian chip firms surged 12%, set for a record one-day advance.
“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.
Bloomberg’s gauge of the dollar rose 0.2%, snapping a five-day run of losses. The Treasury 30-year yield slipped two basis points Friday to 5.19%. The decline in yields came after they rose to multiyear highs earlier this week as the Fed’s decision to keep interest rates on hold added to concern about elevated inflation.
Gold traded around $4,075 an ounce. Oil fell, with Brent crude dropping 2% to about $87.10 a barrel. The global benchmark is still up by about a fifth this month.
That said, attention in Asia was on the BOJ. All 52 economists surveyed by Bloomberg forecast the BOJ would hold its benchmark rate steady at the end of a two-day gathering as it assesses the impact of last month’s increase.
The 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. Credit Agricole SA reported better-than-expected results for the second quarter, as income rose at its French retail business and its asset management arm reported a record profit. 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. 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. 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 0.5% as of 6:53 a.m. London time Nasdaq 100 futures rose 1.2% The MSCI Asia Pacific Index rose 4.4% The MSCI Emerging Markets Index rose 6.3% Japan’s Topix rose 1.5% Australia’s S&P/ASX 200 rose 0.1% Hong Kong’s Hang Seng fell 0.2% The Shanghai Composite rose 0.9% Euro Stoxx 50 futures rose 0.8% Currencies
The Bloomberg Dollar Spot Index rose 0.2% The euro fell 0.2% to $1.1506 The Japanese yen fell 0.7% to 160.63 per dollar The offshore yuan was little changed at 6.7452 per dollar The British pound fell 0.2% to $1.3442 Cryptocurrencies
Bitcoin fell 0.7% to $64,269.99 Ether fell 0.9% to $1,903.07 Bonds
The yield on 10-year Treasuries declined two basis points to 4.65% Japan’s 10-year yield was unchanged at 2.795% Australia’s 10-year yield declined seven basis points to 4.93% Commodities
Spot gold fell 0.7% to $4,075.75 an ounce West Texas Intermediate crude fell 2.4% to $81.57 a barrel This story was produced with the assistance of Bloomberg Automation.
–With assistance from Ruth Carson and Momoka Yokoyama.
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