Tech stocks rally in Asia as US inflation data looms
South Korean and Japanese tech shares jumped despite a strong US jobs report, as oil prices rose on Middle East tensions.
Shares of technology firms in Seoul and Tokyo surged on Monday, even after a surprisingly strong US jobs report raised the odds of a Federal Reserve rate hike at its September meeting.
Asian tech surge
Samsung rallied 5.7% and SK hynix jumped 8.3%, while investment powerhouse SoftBank surged more than 11%. The broader South Korean market closed over four percent higher, and the Japanese Nikkei added 2.1% as chipmaker TSMC lifted Taiwan’s index by 1.7%.
Analysts say the optimism is driven by the belief that massive corporate investments in artificial intelligence will eventually translate into earnings growth, even if recent price swings have rattled some traders.
US data and market sentiment
A robust US jobs reading on Friday surprised many and fed expectations that the Federal Reserve will tighten policy on 16 September. The data also coincided with a fresh round of US‑Iran strikes that pushed oil prices higher, sending diesel to a new US record according to motorists’ association AAA.
Dan Coatsworth, head of markets at AJ Bell, noted, "Many of the headlines from the dominant AI theme remain positive, but investors are having to contend with the potential for an interest rate hike at the US Federal Reserve's meeting later this month."
Currency markets felt the impact of the US Labor Day holiday, with the yen strengthening against all majors and hitting its highest level against the dollar since February, prompting speculation of possible Japanese intervention.
Looking ahead
Investors will watch the upcoming US consumer‑price report for August, due on Friday, for clues on core inflation. A worse‑than‑expected reading could cement expectations of a Fed rate increase.
Tech giant Oracle is set to report earnings on Thursday, a data point analysts will use to gauge the health of the AI boom.
European markets were mixed: the Eurozone posted stronger‑than‑expected Q2 growth, but German factory output fell sharply in July, adding pressure on Chancellor Friedrich Merz to stimulate growth. In the UK, the FTSE 100 slipped marginally, while France’s CAC 40 edged up and Germany’s DAX fell.
Overall, the combination of central‑bank meetings, US inflation data, and earnings from key tech players suggests volatility could rise in the coming weeks.
Key indices at close: FTSE 100 10,822.13 (down 0.1%), CAC 40 8,306.15 (up 0.3%), DAX 26,006.53 (down 0.2%), Nikkei 66,399.84 (up 2.1%). Oil prices rose, with Brent up 1.4% at $97.64 a barrel and West Texas Intermediate up 1.6% at $92.90.
