Japan, South Korea lead Asia lower as chipmakers pull back after rebound By Investing.com

Investing.com — Japan and South Korea’s technology-heavy stock markets fell sharply on Monday as investors locked in gains across semiconductor shares following last week’s rally, while lower oil prices and easing geopolitical tensions underpinned selective gains elsewhere in the region.

While rose 0.8% and  gained 0.3% after Friday’s softer-than-expected U.S. payrolls report reinforced expectations for Federal Reserve rate cuts later this year, investors across Asia’s semiconductor-heavy markets largely took a breather after the sector’s strong recovery at the end of last week. 

Attention now turns to minutes from the Federal Reserve’s June meeting later this week for further clues on policymakers’ rate outlook after recent signs of moderating labour-market and inflation pressures. Investors are also shifting their focus to the upcoming earnings season after last week’s rebound from a two-day chipmaker rout, looking for evidence that billions of dollars being poured into artificial intelligence infrastructure are beginning to translate into stronger corporate earnings and sustained profit growth.

Unlock premium AI, semiconductor and macro insights with InvestingPro

Profit-taking hits chipmakers after last week’s rebound

South Korea and Japan once again dictated regional sentiment, with investors trimming exposure to semiconductor stocks after Friday’s aggressive rebound from last week’s AI-driven selloff.

South Korea’s  fell 3.2%, while Japan’s  lost 1.3%. Mainland China’s  and the eased 0.6%, suggesting investors remained cautious toward technology shares despite improving global risk sentiment.

Profit-taking returned to much of Asia’s semiconductor complex after last week’s rebound, although pockets of strength remained. Samsung Electronics Co Ltd (KS:) slipped 0.9% and SK Hynix Inc (KS:) lost 4.3% in Seoul, while MediaTek Inc (TW:) fell 1.4% in Taipei.

Nvidia’s largest AI server assembly partner, Hon Hai Precision Industry Co Ltd (TW:) (Foxconn), bucked the broader trend, rising 0.6% after posting record June and second-quarter revenue driven by strong AI server demand. Taiwan Semiconductor Manufacturing Co. also edged 0.6% higher, although gains in heavyweight exporters were not enough to lift the broader , which was little changed.

Bank of America said the recent correction in AI-related equities appeared to reflect a positioning reset rather than weakening fundamentals, arguing that spending on AI infrastructure remains supported even as investors become more selective following this year’s strong rally.

Lower oil prices support sentiment as focus shifts to earnings

Broader market sentiment continued to draw support from easing geopolitical risks after last month’s ceasefire between Israel and Iran.

Oil prices remained subdued as concerns over disruptions to shipments through the Strait of Hormuz faded and major producers continued restoring output, improving the inflation outlook across global markets.

Elsewhere, Hong Kong’s rose 1.1%, while Indonesia’s added 0.8% and Australia’s was little changed.

Looking ahead, investors will focus on a busy week for regional macro data. DBS expects Bank Negara Malaysia to keep its unchanged, while inflation readings from Thailand, China, Taiwan and the Philippines will be scrutinised for clues on the region’s price outlook. The bank expects inflation to accelerate in Thailand, remain broadly steady in China and Taiwan, and ease only slightly in the Philippines.

Taiwan’s June trade figures will also be closely watched for signs that AI-related demand continues to underpin technology exports.

Reporting by Roushni Nair