The South Korean Kospi index jumped by nearly 18% on Friday, reflecting gains on Wall Street. AI-related stocks reversed earlier losses in a significant rebound. U.S. futures increased by 0.5%, and oil prices declined by more than 1%.
The Kospi opened strong and ended the day up 17.9% at 6,695.45, marking its largest single-day gain. Samsung Electronics shares rose by 28%, and SK Hynix saw a 30% increase. Despite this surge, the Kospi remains below the peak of over 9,000 from June after losing over 17% the previous three days due to concerns over an AI bubble and competition from China.
The rebound came after Microsoft reported better-than-expected quarterly profits, attributed to substantial AI investment translating into results. Microsoft’s shares climbed 15.5%, experiencing their best performance in nearly 18 years. As a result, traders rushed to purchase tech stocks, previously under pressure over investment return doubts.
European markets also opened with gains. Germany’s DAX increased by 1% to 25,870.09, Paris’s CAC 40 rose by 1% to 8,570.48, and the UK’s FTSE improved by 0.8% to 10,983.31. Tokyo’s Nikkei 225 gained 4% to 64,362.02, with SoftBank Group rising 13.8% and Tokyo Electron advancing by 6.2%.
The market swung from discarding AI stocks to aggressively buying them, remarked Stephen Innes of SPI Asset Management.
The dollar regained strength after a sharp fall against the Japanese yen, climbing 0.5% to 160.28 yen. Analysts suspect coordinated intervention by Japan and the U.S., including a “rate check” by the Federal Reserve Bank of New York. Both countries’ officials refrained from commenting.
The Bank of Japan kept interest rates unchanged. Analysts suggest officials may have intervened to curb speculative moves linked to the central bank’s policies. Jonas Golterman of Capital Economics noted the yen’s persistent weakness due to differing interest rate levels between Japan and the U.S.
Taiwan’s Taiex index surged 8%, aided by a 10% rise in TSMC shares. Australia’s S&P/ASX 200 gained 0.1%, the Hang Seng in Hong Kong edged 0.1% higher, and the Shanghai Composite index climbed 0.7%. China’s July factory activity showed its first contraction in five months, influenced by weak domestic demand and recent typhoons.
Oil prices fell, partly due to U.S.-Iran tensions affecting the Strait of Hormuz, a vital oil transport route. Brent crude fell 1.4% to $85.70 per barrel, while U.S. crude declined 1.6% to $82.23.
On Wall Street, the S&P 500 increased by 1.7%, the Dow Jones rose by 1.2%, and the Nasdaq composite advanced 2.8%.
Reported by Chan from Hong Kong.