Asia shares fall on tech pullback after AI-fuelled rally; SK Hynix plunges 10%
SK Hynix and Samsung Electronics lead the declines
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[TOKYO] Asian shares reversed course on Thursday (Aug 6) after the previous day’s AI-fuelled rally, as fickle enthusiasm over AI spending turned cautious, while oil prices held in a tight range as markets assessed prospects for a US-Iran peace deal.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.39 per cent, led by declines in tech firms. South Korean shares extended losses to 4.16 per cent, while Japan’s Nikkei was down 0.94 per cent, paring an earlier drop of as much as 2.05 per cent.
In Seoul, Samsung Electronics fell 6 per cent and peer SK Hynix plunged nearly 10 per cent. In Tokyo, Kioxia lost 8.2 per cent, while Tokyo Electron slumped 5.18 per cent.
The pullback followed a weaker session on Wall Street overnight, where the Nasdaq snapped a days-long winning streak as shares of Elon Musk-led SpaceX and Advanced Micro Devices stumbled after their quarterly earnings.
Although the AI and satellite company highlighted faster-than-expected returns from its AI spending, investors remained concerned about how long its profitable Starlink business could continue to bankroll costly investments in data centres. And while AMD’s results beat analysts’ estimates, they fell short of investors’ lofty expectations.
A senior Iranian source and two regional officials told Reuters that a proposed deal between Iran and Oman to help end five months of war between Iran and the US would give Teheran control over ships entering the Gulf through the Strait of Hormuz, one of the biggest concessions yet to Iran.
Brent crude futures fell to US$79.01 per barrel, down 0.55 per cent. US West Texas Intermediate futures edged 0.65 per cent down to US$74.73 a barrel.
Madison Cartwright, senior geo-economics analyst at Commonwealth Bank of Australia, said a deal to reopen the Strait of Hormuz could be reached by early September, though he remained sceptical that a deal was imminent.
“Iran still has more leverage and will extract additional concessions from the US under any new deal,” Cartwright said in a note.
In early European trades, pan-region Euro Stoxx 50 futures were up 0.18 per cent, German DAX futures gained 0.26 per cent and FTSE futures nudged 0.06 per cent higher.
Investors are now turning their attention to US labour market data ahead of Friday’s closely watched non-farm payrolls report. ADP figures on Wednesday showed private employers added 44,000 workers in July, slowing from 95,000 in June and coming in about 25,000 below expectations.
Economists polled by Reuters expect the US government’s report to show the US economy added 80,000 jobs in July, after a 57,000 gain in June, with the unemployment rate forecast to hold steady at 4.2 per cent.
Futures markets are pricing in about a 54 per cent chance of a rate hike at the US Federal Reserve’s September meeting, down from 58 per cent a day ago, according to the CME’s FedWatch tool.
US Federal Reserve Bank of San Francisco President Mary Daly, who is not currently a voting member of the Federal Open Market Committee, said on Wednesday she was “completely supportive” of the decision last week to hold interest rates steady.
The yield on benchmark US 10-year notes fell 0.83 basis points to 4.609 per cent.
In US stock futures, Nasdaq 100 E-minis were down 0.14 per cent, whereas US S&P 500 E-minis were 0.17 per cent higher and Dow E-minis were up 0.21 per cent.
Against the yen, the dollar was steady at 157.75 following last week’s historic currency market intervention when Japan and the US bought yen and pledged further action if necessary to support the currency.
The dollar/yen pair is likely to struggle to find a clear direction, with investors expected to stay largely on the sidelines ahead of Friday’s US job report, said Sony Financial Group senior analyst Juntaro Morimoto.
Spot gold rose 0.2 per cent to US$4,254.10 an ounce, advancing for a fourth session, while spot silver fell 0.38 per cent to US$61.84 an ounce. REUTERS
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