Hong Kong (AFP) – South Korea’s Kospi soared more than five percent in a tech-led surge across Asia on Thursday as a forecast-busting earnings report from US chip titan Micron helped traders brush off their latest worries about the AI investment boom. The regional rally was helped by another plunge in oil prices to below pre-war levels amid growing optimism over 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 eye-watering advances in tech firms in recent years may have gone too far, while questions are asked about when they will see returns on the trillions pumped into the AI sector. While Wall Street has suffered, the selling has been particularly painful in Seoul, where the Kospi — which has hit multiple records this year — plunged 10 percent on Tuesday, with chip giants SK hynix and Samsung taking the brunt of the action.
However, the mood was flipped when Micron Technology announced fourth-quarter revenue forecasts of $50 billion, blowing expectations for around $43 billion out of the water. The news reignited confidence in the AI sector, which has been the key driver of a surge across 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 cash to fund chip facilities. Analysts said the move was seen as likely ramping up the firm’s valuation through capacity expansion and greater foreign investor access.
SK hynix jumped around 10 percent and Samsung more than five percent, pushing up the Kospi almost six percent at one point. Tokyo’s Nikkei also rallied, piling on more than three percent as tech giants Advantest and Tokyo Electron powered higher. Singapore, Taipei, Wellington, Manila, and Jakarta were all in the green, though 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-name performers are downstream software firms.
“In a market that has grown used to asking whether AI expectations have become too inflated, Micron’s answer was blunt: demand is not fading; it is outrunning supply,” said SPI Asset Management’s Stephen Innes. “Memory has moved from being the supporting actor in the AI story to becoming one of its central characters. The market spent the last two years obsessing over the accelerators, the networking stacks, the data-centre buildouts and the hyperscaler capex arms race. But an AI factory without enough memory is a Formula One car with no fuel tank. Nvidia may still be the engine of the trade, but Micron, SK Hynix and Samsung increasingly hold the keys to the part of the system that determines how fast that engine can actually run.”
Oil prices continued their descent on the back of ongoing negotiations to end their US-Iran war and fully reopen the Strait of Hormuz, through which a fifth of world crude passes. While the two sides have voiced differences over some issues including Tehran’s claims to charge fees, there is a growing expectation that the conflict would not erupt again. Meanwhile, maritime tracking firms have reported dozens of ships passing through, easing supply fears. Brent sank to a low of $72.27 Thursday, below the $72.48 it closed at the day before the US and Israel began bombing Iran on February 28, leading it to close the waterway. West Texas Intermediate touched $69.05, two dollars above its February 27 close.
Traders will now be keeping an eye on the release of the personal consumption expenditures index — the Federal Reserve’s preferred gauge of inflation — which could have an influence on the bank’s interest rate plans. A hawkish pivot by the policy committee last week ramped up bets on a hike before the end of the year owing to elevated inflation caused by the war-fuelled spike in energy costs. That has pushed the dollar sharply up against its peers and is within a whisker of a four-decade peak against the yen. The stronger dollar and prospect of higher rates has also hurt gold, which fell below $4,000 Wednesday for the first time since November.
– Key figures around 0230 GMT –
Seoul – Kospi: UP 5.0 percent at 8,893.11
Tokyo – Nikkei 225: UP 3.9 percent at 71,854.88 (break)
Hong Kong – Hang Seng Index: DOWN 1.7 percent at 23,004.31
Shanghai – Composite: DOWN 0.1 percent at 4,107.15
West Texas Intermediate: DOWN 1.7 percent at $69.16 a barrel
Brent North Sea Crude: DOWN 1.9 percent at $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 at 51,848.90 (close)
London – FTSE 100: UP 0.3 percent at 10,461.63 (close)
© 2024 AFP
