Stock markets rally on tech rebound ~ EconomyLens.com

London (AFP) – Global stock markets rallied Friday, led by a record surge of almost 18 percent for Seoul as technology firms performed a blistering recovery from an extended sell-off. After four weeks of blood-letting fuelled by worries over the vast sums being invested in artificial intelligence, traders raced to pick up bargains following a series of strong earnings.

Seoul’s Kospi had been at the forefront of the sell-off after hitting a record high a month ago, with chipmakers SK hynix and Samsung the poster children of the rout, losing around half their value in the panic. However, the voracious buying sentiment that had characterised markets for much of the past two years was reignited Friday. US giant Microsoft unveiled healthy earnings this week that saw their shares storm higher on Wall Street, helping the Nasdaq pile on almost three percent Thursday.

“The rebound in tech powered by Microsoft’s extremely well-received numbers has helped lift the broader market mood, helping investors to put concerns about the Iran conflict and its continuing impact on ice for now,” noted AJ Bell investment director Russ Mould. Wall Street also pushed higher on Friday, with the tech-heavy Nasdaq Composite index rising 0.9 percent. Analysts have noted that heavy selling in recent weeks was focused on concerns about when the huge sums invested in artificial intelligence would see returns, rather than fundamental problems in the sector.

Seoul’s eye-watering rally was helped by news South Korea’s government planned to pump almost $14 billion into its sovereign wealth fund for AI investments and data centres. South Korean chipmaker SK hynix surged 30 percent — wiping out its losses from the previous two days. It was helped by confirmation that Chey Tae-won, chair of parent company SK Group, had bought around $3 million worth of shares, his first purchases in a personal capacity, seen as a vote of confidence in the company.

Shares in Apple fell 9.4 percent despite beating market expectations with sales rising 16 percent to $109.4 billion in the April-through-June period, while profit climbed 27 percent to $29.8 billion. But souring the picture, Apple forecast revenue growth of between nine and 11 percent in the current quarter, which was below estimates. It cited supply constraints. “The fallout from Apple’s warning hasn’t been more pronounced, partly because the market recognises that its issues have more to do with supply than demand,” said Briefing.com analyst Patrick O’Hare. “Still, Apple has the market-cap weight to hang a bit like a wet blanket on the major indices,” he added.

Shares in Amazon surged nearly 13 percent higher, however, after it beat analysts’ expectations when it reported growth in overall revenue and sales, particularly in its cloud, artificial intelligence, and chips divisions. The company said that two of its AI-related divisions grew by “triple-digit percentages” — its AI cloud and chips businesses each “exceeded” $25 billion annual revenue run rates, a measure of recurring sales.

Elsewhere Friday, the yen held gains against the dollar, a day after rallying amid speculation that Japanese authorities intervened to prop up the currency, which had been sitting around 40-year lows. London’s benchmark FTSE 100 index, whose major constituents do not feature technology companies, hit another record high as it came close to reaching 11,000 points for the first time. However, it later gave up those gains.

– Key figures around 1330 GMT –

New York – DOW: UP 0.4 percent at 52,388.55 points

New York – S&P 500: UP 0.5 percent at 7,472.39

New York – Nasdaq Composite: UP 0.9 percent at 25,338.50

London – FTSE 100: FLAT at 10,899.79

Paris – CAC 40: UP 0.6 percent at 8,532.64

Frankfurt – DAX: UP less than 0.1 percent at 25,627.52

Seoul – Kospi: UP 17.9 percent at 6,595.45 (close)

Tokyo – Nikkei 225: UP 4.0 percent at 64,362.02 (close)

Hong Kong – Hang Seng Index: UP 0.1 percent at 25,884.43 (close)

Shanghai – Composite: UP 0.7 percent at 3,832.26 (close)

Dollar/yen: DOWN at 159.51 yen from 162.61 yen on Thursday