LGT Navigator

Tech rebound lifts Asian equities

Microsoft’s strong earnings revived confidence in the Artificial Intelligence (AI) trade, driving a broad rally in US technology shares on Thursday and a record surge in South Korea’s Kospi on Friday. The Nasdaq indices led Wall Street higher, while Asian equities traded mostly higher. Oil prices fell as shipping activity through the Strait of Hormuz improved, while investors await euro-area inflation data and US consumer sentiment figures on Friday.

  • Date
  • Author Shane Strowmatt, Senior Investment Writer
  • Reading time 5 minutes

Samsung
© Shutterstock

South Korea’s Kospi rose 16.8% to 6535.47 points on Friday, its largest gain on record, as renewed confidence in AI-investment prompted a sharp recovery in technology shares. The index had declined 17% over the previous three sessions amid concerns about debt at leading technology companies, Chinese competition and the growth of leveraged products. Memory-chip maker SK Hynix surged as much as 30%, helped by SK Group Chairman Chey Tae-won’s first personal purchase of its shares, while Samsung Electronics climbed 26%. Investors were encouraged by major technology companies’ continued spending plans, suggesting that the recent AI-related sell-off may be stabilising. Elsewhere in Asia, Japan’s Nikkei 225 gained 3.8% to 64,207.50 points and mainland China’s CSI 300 rose 1.2% to 4602.31 points. Australia’s S&P/ASX 200 and India’s Nifty 50 were little changed at 8973.10 and 24,347.05 points respectively, while Hong Kong’s Hang Seng Index fell 0.4% to 25,769 points.

Bank of Japan holds rates steady

The Bank of Japan left its policy rate at 1% on Friday in an 8-1 vote, while board member Hajime Takata favoured a 25-basis-point increase. The central bank expects core inflation to move clearly above its 2% objective from September, driven by higher wages feeding into consumer prices, rising oil costs and yen depreciation; July core inflation was 1.6%. The Bank of Japan nevertheless expects inflation to subsequently ease towards target as crude prices decline, and reiterated that it will continue raising rates as underlying inflation approaches 2%. The yen strengthened sharply Thursday night, reportedly after Japanese intervention.

China’s factory activity contracts

China’s official manufacturing purchasing managers’ index fell to 49.2 in July from 50.3 in June, moving below the threshold separating expansion from contraction and undershooting expectations, data showed on Friday. The first contraction since February reflected weaker domestic orders, typhoon-related disruptions and fading support from exporters accelerating shipments before higher US tariffs. New orders fell to a 38-month low of 48.5, while construction activity dropped to a record-low 47.0 and the composite index declined to 49.3, its weakest reading since 2022. The figures add pressure on Beijing to bolster domestic demand after second-quarter economic growth slowed to 4.3% year-on-year.

Microsoft results spark Nasdaq rebound

The Nasdaq-100 rose 3.4% to 28,106.34 points on Thursday, ending a six-session decline as strong results from software group Microsoft revived demand for technology shares. Microsoft climbed 15.5%, its largest daily gain since 2008, adding USD 450 billion in market value after reassuring investors that its AI-spending was under control, while Facebook parent Meta Platforms fell 8% after raising the lower end of its investment range. The S&P 500 gained 1.7% to 7437.63 points and the Dow Jones Industrial Average advanced 1.2% to 52,208.06 points, aided by lower oil prices and reduced expectations of a Federal Reserve rate increase at its next meeting. Semiconductor shares also rallied, with Sandisk up 26% and Micron, Intel and AMD gaining between 11% and 18%.

US growth slows as inflation persists

The US economy expanded at an annualised rate of 1.5% in the second quarter, down from 2.1% in the first quarter and weaker than the market had forecast, according to data released on Thursday. Lower inventories and federal spending weighed on growth, although consumer expenditure accelerated to 2.1% and underlying private domestic demand rose by a robust 3.9%. The headline personal consumption expenditures price index fell 0.1% in June but increased 3.7% year-on-year, while core inflation stood at 0.1% month-on-month and 3.3% year-on-year. Inflation therefore remained well above the Federal Reserve’s 2% target, while the personal savings rate declined to a four-year low of 2.7%.

Euro-area growth accelerates in second quarter

Euro-area GDP expanded by 0.4% in the second quarter after stagnating in the first, according to a preliminary Eurostat estimate released on Thursday. Annual growth accelerated to 1% from 0.5%, while EU output rose by 0.5% quarter-on-quarter and 1.2% year-on-year. German GDP increased by 0.2% from the previous quarter and 0.9% from a year earlier, as higher exports countered subdued consumption and falling investment. Germany’s first-quarter growth was revised up to 0.4%, while updated data showed that the economy stagnated in 2024 rather than contracting by 0.5%. Euro Stoxx 50 rose 1.5% to 6341.35 points on Thursday, Germany’s DAX gained 0.6% to 25,612.03 points and France’s CAC 40 added 0.9% to 8485.64 points.

Bank of England holds rates

The Bank of England kept Bank Rate at 3.75% on Thursday, as expected, with six policymakers supporting the decision and three favouring a 25-basis-point increase. The dissent reflected growing concern that energy-market disruption and supply constraints could intensify price pressures, despite UK inflation declining to a 15-month low of 2.6% in June. The British pound gained 0.1% against the US dollar to 1.3376 following the announcement, while the more divided vote increased the possibility of a rate rise if inflation fails to ease further.

Swiss economic outlook improves further

The KOF Economic Barometer rose by 1.4 points to 103.5 in July from a revised 102.1 in June, according to data released on Thursday. The indicator remained above its medium-term average, reinforcing signs of an improving outlook for the Swiss economy. Financial and insurance services, construction, manufacturing and other services contributed to the increase, while foreign demand and private consumption were broadly unchanged. The Swiss Market Index fell 0.7% to 14,392.49 points on Thursday.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from AbbVie, Chevron, Eaton, and Linde.

Economic data in focus: Swiss retail sales (08:30), French Consumer Price Index (08:45), Swiss foreign currency reserves (09:00), German unemployment rate (09:55), EU Consumer Price Index (11:00), Italian Consumer Price Index (11:00), Canadian gross domestic product (14:30), University of Michigan Consumer Sentiment Index (16:00).

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.

LGT Navigator Stocks slide as Fed stance rattles markets All articles
Logout
Forward-looking for generations
Our newsletters - automatically up to date

The LGT newsletters provide you with regular information on insights and news from the fields of business, finance and much more.

Newsletter registration
Follow us
Scaling impact LGT Venture Philanthropy