Asian markets were volatile on Monday as investors tried to hold on to last week’s tech rally, with traders focusing on the upcoming earnings season as oil prices fell on further supplies flowing through the Strait of Hormuz.
After a rocky end to June — fueled by concerns that estimates tied to the AI boom may have been overstated — spirits were lifted Thursday by data showing that fewer than expected U.S. jobs were created last month.
That eased fears that the Federal Reserve could soon raise interest rates to lower inflation and fueled healthy inflation across Asia, led by Seoul.
Still, traders remain jittery and technology firms once again saw big moves in early trade on Monday, with Seoul swinging from a gain of nearly two percent to a loss of more than two percent.
Tokyo was also in the red with Singapore and Sydney, while Hong Kong, Shanghai, Wellington and Taipei edged ahead.
The topic of artificial intelligence remains the dominant force in the markets, with conversations now centering on when firms will see returns on the trillions of dollars invested in the sector and whether valuations have moved forward.
Alphabet, Amazon, Meta and Microsoft have said they will set aside more than $725 billion for the industry this year alone.
The sentiment was lifted by Taipei-listed Hon Hai, which reported a forecast increase in April-June sales and forecast more growth to come.
The firm, also known as Foxconn, has gone beyond assembling low-margin iPhones to create AI servers for Nvidia, along with electric vehicles and robots. The firm’s shares rose more than six percent in Taipei.
The report comes at the start of an earnings season that will be scrutinized for an idea of companies’ AI plans and their outlook in light of the huge sums raised so far.
Also in the picture is the Wall Street debut of South Korean chip titan SK hynix, which sees its $29 billion listing on Friday.
Crude oil prices extended losses as tankers continued to pass through the Strait of Hormuz and on optimism over US-Iran peace talks.
However, SPI Asset Management’s Stephen Innes warned that the benefits may take some time to feed into the economy.
“The knock-on effects of energy rarely reach all at once,” he wrote. “First crude oil movements, then commodities, transportation, consumer confidence, corporate margins, inflation expectations and finally questions central bankers would do better to avoid.
“A few more tankers moving safely through Hormuz may take the edge off the immediate price panic, but it doesn’t undo the cost pressures already at work in the global economy.”
And Dr. Karsten Junius, chief economist at J. Safra Sarasin Bank, added: “Oil exports remain well below pre-war levels and bottlenecks are likely to persist.
“In the meantime, efforts to rebuild strategic and commercial reserves should support demand. As a result, oil prices are likely to settle around $75-$80 per barrel over the next year, keeping the inflation trajectory higher this year.”
– Key figures around 0230 GMT –
Tokyo – Nikkei 225: DOWN 1.2 percent to 68,919.14 (breakdown)
Seoul – Kospi: DOWN 2.4 percent to 7894.58
Hong Kong – Hang Seng Index: UP 0.4 percent to 23,440.64
Shanghai – Composite: UP 0.3 percent to 4,055.47
Dollar/yen: UP at 161.79 yen from 161.29 yen on Friday
Euro/dollar: DOWN at $1.1430 from $1.1442
Pound/dollar: DOWN at $1.3341 from $1.3355
Euro/pound: DOWN at 85.65 pence from 85.68 pence
West Texas Intermediate: DOWN 0.1 percent to $68.64 a barrel
Brent North Sea crude: DOWN 0.3 percent to $71.93 a barrel
London – FTSE 100: Up 0.3 percent to 10,679.03 (close)
New York – Dow: Closed for public holiday
