South Korea’s Kospi rose more than five percent in a tech-led rally across Asia on Thursday, as a report on earnings forecasts from US chip titan Micron helped traders shake off recent worries about a boom in AI investment.
The regional rally was helped by another drop in oil prices below pre-war levels, amid growing optimism about US-Iran peace talks and news of more ships passing through the Strait of Hormuz.
Markets have endured a rollercoaster run this week amid fears that the stunning advances at tech firms in recent years may have gone too far, as questions are raised about when they will see returns on the trillions pumped into the AI sector.
While Wall Street has suffered, selling has been particularly painful in Seoul, where the Kospi – which has hit multiple records this year – fell 10 percent on Tuesday with chip giants SK hynix and Samsung taking most of the action.
However, the mood changed when Micron Technology announced fourth-quarter revenue forecasts of $50 billion, blowing expectations for about $43 billion out of the water.
The news revived confidence in the AI sector, which has been the main driver of a rally in markets this year.
It also came hours after SK hynix said it planned to raise $29 billion by listing on Wall Street’s tech-heavy Nasdaq, saying it would use the money to fund chip equipment.
Analysts said the move was seen as an increase in the firm’s valuation through capacity expansion and greater access to foreign investors.
SK hynix jumped about 10 percent and Samsung more than five percent, pushing the Kospi almost six percent at one point.
Tokyo’s Nikkei also rose, rallying more than three percent as tech giants Advantest and Tokyo Electron rose.
Singapore, Taipei, Wellington, Manila and Jakarta were all in the green, although Hong Kong, Shanghai and Sydney struggled.
Seoul, Tokyo and Taipei – where many of the world’s hardware makers are listed – have been at the forefront of the rally this year, taking over from Wall Street, where many of the big performers are downstream software firms.
“In a market that has grown accustomed to asking whether AI expectations are overblown, Micron’s response was unequivocal: demand isn’t waning; it’s outpacing supply,” said Stephen Innes of SPI Asset Management.
“Memory has moved from being a supporting actor in the story of AI to one of its central characters. The market spent the last two years obsessing over accelerators, networking clusters, building data centers and the high-capacity high-end arms race.
“But an AI factory without enough memory is a Formula 1 car without a fuel tank. Nvidia may still be the engine of commerce, but Micron, SK Hynix and Samsung increasingly hold the keys to the part of the system that determines how fast that engine can run.”
Oil prices continued their decline following ongoing negotiations to end their US-Iran war and the full reopening of the Strait of Hormuz, through which a fifth of the world’s crude oil passes.
While the two sides have expressed disagreement over several issues, including Tehran’s claims to levy tariffs, there is a growing expectation that the conflict will not flare up again.
Meanwhile, maritime tracking firms have reported dozens of ships passing through, easing supply fears.
Brent hit a low of $72.27 on Thursday, below the $72.48 it closed a day before the US and Israel began bombing Iran on February 28, prompting it to close the waterway.
West Texas Intermediate touched $69.05, two dollars above the February 27 close.
Traders will now keep an eye on the release of the personal consumption expenditure index – the Federal Reserve’s preferred gauge of inflation – which could have an impact on the bank’s interest rate plans.
A sharp pivot from the policy committee last week raised bets for a hike before the end of the year due to elevated inflation caused by rising energy costs, fueled by the war.
That has boosted the dollar sharply against its peers and is within a four-decade high against the yen.
A stronger dollar and the prospect of higher rates have also hurt gold, which fell below $4,000 on Wednesday for the first time since November.
– Key figures around 0230 GMT –
Seoul – Kospi: UP 5.0 percent to 8,893.11
Tokyo – Nikkei 225: UP 3.9 percent to 71,854.88 (break)
Hong Kong – Hang Seng Index: DOWN 1.7 percent to 23,004.31
Shanghai – Composite: DOWN 0.1 percent at 4,107.15
West Texas Intermediate: DOWN 1.7 percent to $69.16 a barrel
Brent North Sea crude: DOWN 1.9 percent to $72.36 a barrel
Euro/dollar: UP at $1.1364 from $1.1357 on Wednesday
Pound/dollar: UP at $1.3177 from $1.3162
Dollar/yen: DOWN at 161.70 yen from 161.81 yen
Euro/pound: DOWN at 86.24 pence from 86.26 pence
New York – Dow: UP 0.4 percent to 51,848.90 (close)
London – FTSE 100: Up 0.3 percent to 10,461.63 (close)
