SEOUL (AP) — In a notable surge, South Korea’s Kospi index experienced an extraordinary increase of nearly 18% on Friday. This rise followed favorable trends on Wall Street, where stocks associated with artificial intelligence rebounded after prior losses.
U.S. futures saw a 0.5% uptick, while oil prices decreased by more than 1%. Opening with a strong performance, the Kospi eventually soared 17.9% to reach 6,695.45, marking its largest single-day gain in history. South Korean tech leader Samsung Electronics witnessed a 28% rise, with memory chipmaker SK Hynix climbing 30%.
Despite Friday’s surge, the Kospi remains significantly lower than the over 9,000 peak achieved in June. The benchmark had previously dropped over 17% in three days due to investors offloading technology stocks, driven partly by concerns over an AI bubble and rising competition from Chinese chip and AI companies. The last record, nearly a 12% gain, occurred in October 2008 amidst the global financial crisis.
The recovery was triggered by Microsoft’s robust profits for the latest quarter, indicating that substantial AI investments are yielding returns. Microsoft’s shares jumped 15.5%, marking its best day in 18 years. Investors re-entered the market to acquire shares of tech companies that had recently faltered over doubts about investment returns. European markets also saw gains on Friday.
Germany’s DAX increased by 1% to 25,870.09, France’s CAC 40 rose 1% to 8,570.48, and the UK’s FTSE moved up by 0.8% to 10,983.31. In Asia, Tokyo’s Nikkei 225 climbed 4% to 64,362.02. SoftBank Group, an investor in OpenAI, jumped 13.8%, with Tokyo Electron, a chip equipment maker, rising 6.2%.
The market shifted from disposing of AI stocks to scrambling for opportunities before many traders had even finished assessing the situation
, commented Stephen Innes of SPI Asset Management.
The dollar recovered following a notable decline against the Japanese yen, appreciating by 0.5% to 160.28 yen. Speculation arose about intervention by Japanese and U.S. regulators, as the dollar had been trading above 160 yen, reaching near historical highs. Japan’s Nikkei reported coordinated efforts with the Federal Reserve Bank of New York conducting a “rate check,” asking banks for exchange-rate quotes.
Officials did not comment on these activities. As anticipated, the Bank of Japan maintained interest rates during its policy meeting. Analysts suggest possible intervention to curb speculative moves linked to central bank decisions.
Jonas Golterman of Capital Economics noted:While support for the yen may not differ from past efforts, persistent action suggests the yen will hold around the 160 mark this year before rebounding next year.
The Federal Reserve similarly kept its benchmark rate unchanged this week. A gap between interest rates in Japan and the U.S. remains a significant factor affecting yen weakness. The euro slightly fell to $1.1509 from $1.1524.
Taiwan’s Taiex index rose by 8%, driven by a 10% increase for chipmaker TSMC. Australia’s S&P/ASX 200 improved modestly, gaining 0.1% to 8,976.80. Hong Kong’s Hang Seng moved up 0.1% to 25,884.83, while the Shanghai Composite index gained 0.7% to 3,832.26.
An official survey in China indicated slowing factory activity in July, marking the first contraction in five months. Analysts attribute this to weak domestic demand and recent typhoon impacts. The economy saw its slowest growth in over three years in the April-June quarter, achieving a 4.3% expansion.
China’s Politburo meeting the day before did not lead to major policy shifts affecting markets. Oil prices fell as U.S.-Iran tensions kept the Strait of Hormuz mainly shut. Brent crude, the global benchmark, dropped 1.4% to $85.70 per barrel, compared to its pre-February Iran conflict price of near $72 a barrel. U.S. benchmark crude dipped 1.6% to $82.23 per barrel.
According to ING commodities analysts, there are signs of increased oil flow through the Strait of Hormuz, slightly alleviating supply pressure. Ship tracking data revealed a minor rise in tanker crossings, though figures remain limited.
On Thursday, Wall Street’s S&P 500 gained 1.7%, the Dow Jones Industrial Average rose 1.2%, and the Nasdaq composite increased 2.8%.
Chan reported from Hong Kong.
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