Tech stocks enjoy rebound after US inflation on mixed day for markets
Tech firms led on a mixed day for Asian stocks Thursday as investors push back into the sector after a summer rout, with confidence boosted by easing US interest rate hike fears after data showed inflation slowing last month.
The consumer price index (CPI) report for July, which was in line with forecasts, followed figures pointing to a softer jobs market and gives the Federal Reserve room to keep borrowing costs on hold for now.
However, with the reading holding stubbornly above the bank’s two percent target for more than five years — and the Iran war keeping oil prices elevated — monetary policymakers are still expected to tighten at some point.
Expectations that inflation will remain elevated saw an auction of 10-year US Treasuries — a key guide for rates rates — result in the highest yield since 2007 during the global financial crisis.
“July marked 65 consecutive months with inflation running above target. Nevertheless, odds of a rate hike in September were pushed out by the US CPI report,” said Neil Wilson at Saxo Markets.
“It looks as though this was soft enough for the market to give the Fed more time to sit around with inflation above target.”
He added that there were questions over whether Fed boss Kevin Warsh would match his inflation-busting rhetoric, “stock futures are firmer, the dollar weaker, gold up… (the) prospect of no hike this year is going to support the bull case for equities”.
A broadly positive day on Wall Street that saw the S&P 500 end with gains was followed by most of Asia.
Tech firms were back in favour after a selloff from late June to late July caused by fears over the vast sums invested in projects around the world.
South Korean and Japanese stocks led the way Thursday, the main beneficiaries of a newfound optimism over the AI trade that had fuelled their eye-watering surge to multiple records this year.
Seoul’s Kospi jumped 3.6 percent thanks to chipmakers SK hynix and Samsung, who have this month clawed back some of their summer losses.
The index lost 40 percent between hitting its June high and August 6 intra-day trough. It has since rallied about 20 percent, putting it in a bear market.
Tokyo added more than one percent with Kioxia, Advantest and Tokyo Electron enjoying fresh buying.
Wellington, Bangkok and Taipei were also higher, but afternoon selling weighed on Hong Kong, Shanghai, Singapore and Sydney.
The latest tech bounce has been helped by some bargain-buying and government measures to stabilise retail investor volatility, as well as strong earnings reports from market heavyweights including Amazon, Microsoft and more recently CoreWeave.
