LGT Navigator

AI selling weighs on Asian stocks

Renewed selling in AI-related shares sent Asian equities lower on Monday, with South Korea’s KOSPI recording particularly heavy losses as Samsung Electronics and SK Hynix declined sharply. Oil prices also fell after signs of a possible diplomatic opening between the US and Iran reduced the geopolitical risk premium. US markets ended Friday higher as Amazon’s strong results helped offset a sharp decline in Apple shares. Attention turns to US labour-market indicators this week, culminating in Friday’s employment report.

  • Data
  • Autore Shane Strowmatt, Senior Investment Writer
  • Tempo di lettura 5 minuto

AI
© Shutterstock

Alongside geopolitical developments, US labour-market data take centre stage this week, culminating in Friday’s July employment report, including nonfarm payrolls, unemployment figures and wage growth. Ahead of the report, the US releases June JOLTS job openings on Tuesday, the ADP private-sector employment report for July on Wednesday, and initial and continuing jobless claims on Thursday. Business activity also comes into focus, with July manufacturing Purchasing Managers’ Indices due on Monday for most major economies, followed by services indices on Wednesday, including the closely watched US ISM surveys. Inflation data include Switzerland’s July Consumer Price Index on Monday and Chinese consumer and producer prices at the weekend. China also releases July trade figures on Friday, providing further insight into the health of the world’s second-largest economy.

Corporate earnings also remain in focus, with Palantir (Monday) and AMD (Tuesday) providing signals on demand for AI-related software, semiconductors and data-centre infrastructure. SpaceX (Tuesday) will offer fresh insights into the recently listed company and the wider space economy, while Eli Lilly (Wednesday) will provide an update on the rapidly growing market for obesity treatments.

Asian stocks fall as KOSPI tumbles

South Korea’s KOSPI plunged 4.9% on Monday as renewed selling in AI-related shares outweighed optimism over easing tensions with Iran. The decline followed Friday’s record 18% rally and a 22% slump in July. Japan’s Nikkei 225 dropped 1.1%, while mainland China’s CSI 300 fell 1.1% and Australia’s S&P/ASX 200 gained 0.2%.

Oil falls as Iran tensions ease

Oil prices fell sharply on Monday after US President Donald Trump said he had postponed planned military action against Iran following requests from Tehran and other Middle Eastern countries. West Texas Intermediate (WTI) futures declined 6.1% to USD 79.50 per barrel, while Brent crude oil futures fell 5.3% to USD 83.25, as investors reduced the geopolitical risk premium. Trump said a potential agreement would reopen the Strait of Hormuz and address Iran’s nuclear programme, though Tehran responded cautiously and an Iranian news agency dismissed the proposal.

Amazon lifts US equities

US equity markets rose on Friday, supported by Amazon’s 15% rally after the online retailer reported strong second-quarter results, driven by growth in its AWS cloud business. The Nasdaq-100 gained 0.6% to 28,274.20 points, while the S&P 500 rose 0.7% to 7489.72 points and the Dow Jones Industrial Average added 0.5% to 52,485.03 points. Apple shares fell 7% after its revenue outlook disappointed amid component shortages, while the Nasdaq-100 nevertheless ended July 6.6% lower as investors remained concerned about AI-valuations.

US backs yen intervention

The US joined Japan’s yen-buying operation last week, the first such bilateral intervention since 1998, as Washington sought to avoid Treasury sales that could unsettle US funding markets. The yen had weakened to JPY 163.73 per US dollar on Thursday before recovering to JPY 157.57 on Friday, and was trading above JPY 156 early on Monday. While the operation could possibly limit pressure on Japanese government bonds and reflect broader US-Japan economic and geopolitical cooperation, it alone is unlikely to sustainably reverse the yen’s decline without tighter Bank of Japan monetary policy.

Euro-area inflation rises to 2.9%

Euro-area annual inflation increased to 2.9% in July from 2.8% in June, according to Eurostat’s flash estimate published on Friday. Energy inflation accelerated to 10% from 8.5% in June, more than offsetting a decline in inflation for food, alcohol and tobacco to 1.2% from 1.5%. Inflation excluding energy, food, alcohol and tobacco edged up to 2.5% from 2.4%. The Euro Stoxx 50 gained 0.2% to 6358.01 points on Friday, Germany’s DAX rose 0.1% to 25,629.24 points and France’s CAC 40 added 0.3% to 8509.64 points.

Swiss retail sales rise in June

Swiss retail sales increased by 0.5% year-on-year in nominal terms and by 1.5% after adjusting for prices in June, according to provisional data released by the Federal Statistical Office on Friday. Petrol station revenue rose by 3.2%, supported by higher oil prices, while fuel sales climbed 7.1% in nominal terms but fell 6.1% in real terms. The Swiss Market Index declined 0.3% to 14,346.14 points on Friday.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from Berkshire Hathaway and Vertex Pharmaceuticals.

Economic data in focus: Manufacturing Purchasing Managers’ Indices from several of the world’s largest economies, including Switzerland (09:30), Italy (09:45), France (09:50), Germany (09:55), the euro area (10:00), the UK (10:30) and US ISM (16:00); German retail sales (08:00) and Swiss Consumer Price Index (08:30).

LGT helps you make informed investment decisions

Global economic and market trends at a glance

You can also follow us on Facebook or LinkedIn – or visit Insights and discover interesting background articles. If you have questions, a consultant from the bank will be happy to help you.

Imprint
Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.