AI Trading Enthusiasm Returns, US Tech Stocks Rise in Pre-Market Trading, Micron Up Over 1%, International Oil Prices Rise, Spot Gold Dips Slightly

Global stock markets rose for the third consecutive week as renewed enthusiasm for AI trading, combined with cooling US inflation, dampened market expectations for a Federal Reserve rate hike in September, driving a broad rebound in tech stocks and lifting Asian-Pacific markets.

Most large-cap US tech stocks rose in pre-market trading, with Micron Tech up 1%, SpaceX up 0.5%, Tesla up 0.3%, Amazon and Alphabet A up 0.1%, NVIDIA and Apple flat, Meta Platforms and Microsoft down 0.1%, and SK Hynix down 0.4%.

The US Department of Labor released mild inflation data for two consecutive days this week. Coupled with earlier employment reports that fell short of expectations, money market pricing currently indicates approximately a 35% probability of a rate hike in September. The Korea Composite Stock Price Index (KOSPI) surged more than 2% on Friday, bringing its weekly gain to 11% and ending a seven-week losing streak. Samsung Electronics and SK Hynix both rose more than 15% over the past five trading sessions.

Yugo Tsuboi, Chief Strategist at Daiwa Securities, stated, "The mild easing of uncertainty surrounding US monetary policy has become a catalyst for the rebound in tech stocks. With no signs of worsening US inflation, excessive market concerns about a hawkish turn by the Federal Reserve have subsided, prompting capital to flow back into high-growth stocks."

• Most large-cap US tech stocks rose in pre-market trading, with Micron Tech up 1%, SpaceX up 0.5%, Tesla up 0.3%, Amazon and Alphabet A up 0.1%, NVIDIA and Apple flat, Meta Platforms and Microsoft down 0.1%, and SK Hynix down 0.4%.
• The Euro Stoxx 50 opened 0.25% higher, the German DAX rose 0.65%, the UK FTSE 100 rose 0.1%, and the French CAC 40 rose 0.1%.
• The Nikkei 225 rose 0.6% to close at 68,713.80 points; the TOPIX rose 0.5% to close at 4,197.20 points; and the Seoul Composite Index surged 2.41% to close at 6,977.34 points.
• The yen traded steadily on Friday, hovering around 159.40 per US dollar.
• The yield on the two-year US Treasury note remained flat at 4.15%, having dropped 6 basis points the previous day.
• Spot gold fell 0.5% to $4,330 per ounce.
• Brent crude oil edged up to approximately $87.55 per barrel, while WTI crude oil rose 1% during the day to $82.08 per barrel.

Rising Rate Cut Expectations Boost Appeal of Tech Stocks

Mild US inflation data for two consecutive days became the core driver of this market rebound. Most large-cap US tech stocks rose in pre-market trading, with Micron Tech up 1%, SpaceX up 0.5%, Tesla up 0.3%, Amazon and Alphabet A up 0.1%, NVIDIA and Apple flat, Meta Platforms and Microsoft down 0.1%, and SK Hynix down 0.4%.

The Philadelphia Semiconductor Index rose 0.5% on Thursday, closing at its highest level since mid-July; Asian chip-related stock indices rose nearly 1% on Friday, also poised to record their highest closing levels since July.

Last month's sell-off in tech stocks stemmed from market concerns that the year's hottest trade was rising too quickly. Strong earnings reports subsequently released by several major tech companies alleviated these concerns, attracting investors to reposition in AI-related assets. Hitoshi Asaoka, Chief Strategist at Asset Management One, stated, "A significant amount of hyperscale cloud computing capital is flowing into the hardware sector, which directly translates into robust sales and profit growth for hardware companies. Investors are returning to a fundamental logic—re-examining corporate earnings themselves."

Short-Term US Treasuries Outperform, Long-Term Yields Remain Under Pressure

Supported by expectations of cooling inflation, US Treasury bonds continued this week's rally, with short-term bonds, which are more sensitive to interest rates, outperforming long-term bonds. The yield on the two-year US Treasury note remained almost flat at 4.15% on Friday, after dropping 6 basis points the previous day.

Meanwhile, the US Treasury yield curve continued to steepen, with the spread between 30-year and 5-year Treasury yields widening for the third consecutive week, marking the longest continuous widening streak since mid-April. The yield on 30-year Treasury notes auctioned by the US Treasury Department this week hit a new high not seen in a quarter of a century, reflecting investors' demand for higher returns to absorb the expanding fiscal deficit.

Stephen Juneau, Economist at Bank of America Securities, stated, "The next round of data before the September meeting will be crucial." He also pointed out, "The market has clearly begun to increasingly price in rate hike expectations, as recent months' data have been generally dovish."

Broad Gains in Asia-Pacific Markets, Yen Trades Steadily

Major Asia-Pacific stock indices collectively closed higher on Friday. The Nikkei 225 rose 0.6% to close at 68,713.80 points; the TOPIX rose 0.5% to close at 4,197.20 points; and the Seoul Composite Index surged 2.41% to close at 6,977.34 points.

Regarding the yen, although the government led by Japanese Prime Minister Sanae Takaichi reportedly supports rate hikes, the yen traded steadily on Friday, hovering around 159.40 per US dollar, still near the 160 threshold.

In other assets, Brent crude oil edged up to approximately $87.55 per barrel, while WTI crude oil rose 1% during the day to $82.08 per barrel, despite no signs of easing tensions in the Middle East. Spot gold fell 0.5% to $4,330 per ounce.