Global markets displayed a mixed performance due to a combination of easing geopolitical tensions in the Middle East and ongoing concerns about the overvaluation of the semiconductor sector, coupled with uninspiring economic data from Asia. While hopes for a new deal in the Middle East provided some optimism, the tech sector, particularly in South Korea, experienced a significant downturn. For instance, AI memory chipmaker SK Hynix's shares dropped 8%, and tech giant Samsung Electronics' shares fell 8.4%.
The selloff in AI-related tech stocks extended into the new week, causing substantial declines in East Asian markets. Japan's Nikkei 225 decreased by 1.2%, South Korea's Kospi plunged 5.4%, and China's Shanghai Composite was down 0.7%. Hong Kong’s Hang Seng, however, remained flat. This broad decline in Asian equities reflects a dampened risk appetite among investors, further influenced by global bond yields and the lack of positive economic signals from the region.
Foreign exchange markets saw notable activity, with US Treasury Secretary Scott Bessent confirming intervention in the Japanese yen. The US and Japan confirmed joint action to support the yen, which had been trading near 40-year lows. This intervention, which included a coordinated yen-buying effort, aimed to curb irregular currency movements, with the possibility of further joint interventions if necessary. The US dollar started Monday at 99.7. Meanwhile, gold prices rose 0.6% to $4,070 per ounce due to easing geopolitical tensions and reduced likelihood of interest rate hikes, while Brent crude oil prices fell 5.1% to $83.4 a barrel.
