Asian stock markets saw broad gains, propelled by softer US inflation data and a rally in technology shares driven by strong AI-related earnings. US headline CPI rose 3.4% year-over-year in July, down from 3.5% in June, while core CPI increased 2.5% compared to 2.6% the previous month. Both figures matched market expectations, reinforcing hopes for a more accommodative Federal Reserve policy. The CME FedWatch tool indicated a 40.1% chance of a rate hike in September, with October odds dropping to 60% from 75% the day before, and the next hike not fully priced in until December [1].
Investor confidence in technology shares rebounded following last month's selloff, fueled by strong earnings from major tech companies and optimism about sustained AI infrastructure spending. Japan's Nikkei 225 Index rose 1.63% to clear 68,600, supported by domestic producer prices rising 7.2% in July, slightly easing from 7.3% in June and below forecasts of 7.4%. South Korea's KOSPI surged nearly 4.22% to above 6,850, led by major chipmakers. Samsung Electronics gained nearly 5%, and SK Hynix jumped over 9%, reflecting renewed optimism over AI-related demand in the semiconductor sector [1].
BNY's Wee Khoon Chong highlighted that improving risk appetite in regional markets is being reinforced by flows into technology, with reports suggesting regional sovereign wealth funds may invest in South Korean tech companies, further boosting sentiment and validating optimism around Korea's tech sector [1].
Markets in Greater China also participated in the AI-driven rally, though momentum varied. The Shanghai Composite advanced 0.40% to 3,960, and the Shenzhen Component climbed 0.73% to 14,520. Domestic focus was on Semiconductor Manufacturing International Corp. ahead of its earnings report, where net profit was expected to more than double year-over-year. Hong Kong's Hang Seng Index edged up just 0.04% to around 25,450, as investors weighed geopolitical risks and digested Tencent's second-quarter earnings while monitoring developments in China's AI sector [1].
CONCLUSION
Asian equities rallied on the back of softer US inflation and robust AI-driven tech earnings, with Japan and South Korea leading gains. The positive sentiment was further supported by potential sovereign wealth fund investments in Korean technology companies. Market participants remain optimistic about continued AI adoption and accommodative US monetary policy, though geopolitical risks and earnings reports in China warrant ongoing attention.