Stocks declined as the rebound in semiconductor and tech shares weakened, reigniting concerns about the sustainability of the AI-driven rally. The dollar strengthened.
The MSCI Asia-Pacific stock index fell 0.3%, with the gauge tracking chipmakers in the region dropping 0.7%, weighing on market sentiment. South Korea’s benchmark KOSPI index declined 1.4%, despite a government official stating that Seoul is considering using surplus tax revenue from the semiconductor industry to establish an investment fund aimed at supporting long-term growth. Shares of chipmakers Samsung Electronics and SK Hynix both declined.
Wall Street benchmark index futures pared their gains from Friday, when U.S. markets were closed for a holiday. Contracts indicated that European stocks opened lower this week after hitting record highs last week.
Additionally, the Bloomberg Dollar Index strengthened against all ten G10 currencies. Brent crude fell 0.6% to around $71.70 per barrel, easing inflation concerns and boosting U.S. Treasury prices.
As the market enters the second half of the year, investors are cautious, weighing the impact of potential energy shocks from a war in Iran and whether the stock rally driven by artificial intelligence stocks can be sustained. Attention is now shifting to the earnings season, with hopes of seeing whether tech companies can turn their investments in artificial intelligence into profits.
“Market volatility has recently intensified, especially in technology stocks,” said Kazuhiro Sasaki, head of Japan research at Tokio Marine & Nichido Fire Insurance. “Fund managers seeking to lock in profits may continue selling AI stocks that have generally performed well, shifting instead toward underperforming and value stocks.”
He said that as investors sell off stocks in the artificial intelligence sector, industries such as automotive, machinery, and healthcare could benefit. Sasaki noted that investors might remain cautious toward tech stocks ahead of major chipmakers’ earnings reports. He added that if the results exceed expectations, a significant rebound could follow, as many stocks have already corrected to more reasonable levels.
Technical Analysis:
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Gold: Following the two-wave rebound after liquidity swept through the yellow zone we highlighted last Friday, the trading results were excellent. Today, we will continue to monitor whether a rebound signal emerges after low-level liquidity sweeps. For detailed positions, please consult the plugin.
(Gold 15-minute chart)
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Nasdaq: With the U.S. market closed last Friday, we advised a wait-and-see approach. As intraday liquidity gradually resumes, we suggest waiting for confirmation of the 29,200/29,300 test before considering long signals. For detailed positioning, please consult the plugin.
(NASDAQ 15-minute chart)
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Crude Oil: Last Friday, we triggered the sell stop at the break below the blue zone, which delivered two consecutive waves. Today, we will continue monitoring the momentum following the breakdown and look for a pullback to re-enter short positions. For detailed levels, please consult the plugin.
(Crude Oil 15-minute Chart)
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Today’s key financial data and events to watch:
17:00 Eurozone June Producer Price Index (Annual Rate)
22:00 U.S. June ISM Non-Manufacturing Index
