AI Rally Stalls; Asian Stocks Pull Back
Asian stock markets traded lower on Thursday (Aug 6) after the tech-driven rally on Wall Street lost momentum. The MSCI Asia Pacific Index fell approximately 0.2%, while South Korea’s KOSPI declined 1% due to profit-taking in technology and semiconductor stocks.
Downward pressure emerged after the S&P 500 retreated slightly from its record high and the US semiconductor index fell more than 1%. SpaceX shares plunged about 14% as the market fretted over rising AI spending and large-scale share sell-offs. Tech sentiment also weakened after SanDisk fell 7.5% and Western Digital slumped around 11% in after-hours trading.
In energy markets, WTI crude dipped below US$75 per barrel, while Brent held steady around US$79. Prices came under pressure after Iran and Oman reached an understanding regarding a temporary shipping lane in the Strait of Hormuz. However, full opening remains uncertain as issues regarding transit fees, vessel monitoring, and approval from Iran's Revolutionary Guard have yet to be resolved.
The drop in oil prices helped ease concerns over energy-driven inflation. The US dollar remained weak, while gold held steady around US$4,270 per troy ounce after recording its largest daily gain since February. These conditions suggest the market is scaling back expectations for aggressive interest rate hikes but is still seeking safe-haven assets ahead of the Non-Farm Payrolls (NFP) data.
A hawkish stance from the Federal Reserve is tempering optimism. Minneapolis Fed President Neel Kashkari has advocated for gradual rate hikes, while Governor Lisa Cook signaled readiness to act if inflation does not cool soon. Weak ADP data indicates a slowdown in hiring, yet persistent price pressures in the service sector keep the Fed's policy path uncertain.
Newsmaker Analysis: Asian stocks are likely to trade cautiously as investors begin to lock in profits from the AI-fueled rally. While lower oil prices and diplomatic progress regarding the Strait of Hormuz offer positive sentiment for energy-importing nations, pressure on technology stocks could weigh on regional indices. Weak NFP figures could potentially lower yields and support stocks and gold, whereas strong data—especially if accompanied by wage growth—could revive the prospect of interest rate hikes and prolong the correction in tech stocks.
Source: Newsmaker.id
