South Korea's Kospi index jumps nearly 18% on surge in chipmaking stocks

BANGKOK: World share benchmarks advanced, with South Korea's Kospi index jumping near 18 per cent on Friday, tracking gains on Wall Street as artificial intelligence-related stocks bounced back after losses earlier this week.

US futures rose 0.5 per cent and oil prices resumed climbing.

The Kospi surged at the open and then wavered, eventually rocketing up 17.9 per cent to 6,695.45, its largest single day gain ever. Shares of South Korean technology giant Samsung Electronics surged 28 per cent, while memory chipmaker SK Hynix soared 30 per cent.

Despite its big jump Friday, the Kospi remains well below the peak of over 9,000 that it hit in June. It had shed more than 17 per cent in the previous three days as investors dumped technology stocks in part over worries about an AI bubble and rising competition from chipmaking and AI rivals in China. The benchmark's previous largest single day gain, of nearly 12 per cent, was in October 2008 during the global financial crisis.

The rebound followed Microsoft's report Thursday of stronger than expected profits for the last quarter, which were taken as a signal that big spending on AI is translating into profits. Microsoft's shares soared 15.5 per cent for its best day in nearly 18 years.

Traders flooded back into the market to snap up shares in tech companies that had recently swooned over doubts that the huge investments will yield adequate returns.

European shares also advanced in early trading Friday. Germany's DAX rose 0.7 per cent to 25,779.53, while the CAC 40 in Paris climbed 0.9 per cent to 8,559.92. Britain's FTSE picked up 0.5 per cent to 10,935.00.

In other Asian trading, Tokyo's Nikkei 225 climbed 4 per cent to 64,362.02. Multinational investment holding company and OpenAI-investor SoftBank Group jumped 13.8 per cent, while chip equipment maker Tokyo Electron rose 6.2 per cent.

“The market went from throwing AI stocks overboard to fighting for the remaining seats before most traders had finished writing the obituary,” Stephen Innes of SPI Asset Management said in a commentary.

The dollar bounced back after falling sharply against the Japanese yen overnight, gaining 0.5 per cent to 160.28 yen. Regulators in Japan and the US were suspected of intervening in the market after weeks of the dollar trading above 160 yen, near 40-year highs.

Japan's Nikkei financial newspaper said the intervention was coordinated, with the Federal Reserve Bank of New York conducting what is known as a “rate check” where it asks various banks to provide exchange-rate quotes for currency trades.

Officials from both sides refrained from comment on the matter.

As expected, the Bank of Japan opted to keep interest rates unchanged Friday as it wrapped up a policymaking meeting. Analysts said officials may have stepped into the markets to limit speculative moves linked to the central bank's decisions.

“Intervention in support of the yen may not work any better now than it has previously, but the persistence of the Japanese authorities suggests to us that the yen will remain around the 160 level this year before staging a more sustained rebound next year,” Jonas Golterman of Capital Economics said in a commentary.

The Federal Reserve likewise kept its benchmark rate unchanged at its policy meeting this week. A gap between interest rate levels in Japan and the US has been a key factor behind the yen's weakness.

The euro fell to USD 1.1509 from USD 1.1524.

Taiwan's Taiex surged 8 per cent, helped by a 10 per cent jump for chipmaker TSMC.

Australia's S&P/ASX 200 added 0.1 per cent, to 8,976.80.

Hong Kong's Hang Seng edged 0.1 per cent higher, to 25,884.83, while the Shanghai Composite index advanced 0.7 per cent to 3,832.26.

An official survey showed China's factory activity slowed in July, the first contraction in five months. Some analysts believe China's weak domestic demand and recent typhoons helped to slow manufacturing activity. The economy grew at its slowest annual pace in more than three years in the April-June quarter, at 4.3 per cent.

A meeting of China's powerful Politburo a day earlier had little impact on market levels Friday since no major policy changes were announced.

Oil prices traded lower as tensions between the US and Iran kept the Strait of Hormuz, a key waterway for oil transport, largely closed.

Brent crude, the international standard, reversed earlier losses, gaining 0.8 per cent to USD 87.50 a barrel. It was trading near USD 72 a barrel before the Iran war began in late February.

Benchmark US crude picked up 0.4 per cent to USD 83.92 a barrel.

On Thursday, Wall Street's benchmark S&P 500 gained 1.7 per cent. The Dow Jones Industrial Average added 1.2 per cent and the technology-heavy Nasdaq composite rose 2.8 per cent.