Asian equity markets opened the week with mixed moves as heavy selling in semiconductor stocks weighed on Japan and South Korea, while pockets of buying pushed several other regional indexes higher. The pullback in chip shares followed last week’s pronounced rally, prompting investors to harvest gains after recent volatility in AI-focused names.
US futures gave a modest lift to risk appetite in the region. Nasdaq 100 futures rose 0.8% and S&P 500 futures gained 0.3% in Asian trade after a softer-than-expected US payrolls report weakened near-term expectations for additional Federal Reserve rate increases. Market participants are now awaiting the minutes from the Fed’s June meeting later this week for further clues about the central bank’s rate outlook amid signs of moderating labour-market and inflation pressures.
Semiconductor complex eases after rebound
Despite the firmer tone in US futures, markets most exposed to semiconductors took a step back. South Korea’s KOSPI tumbled 3.2%, and Japan’s Nikkei 225 fell 1.3% as investors trimmed positions in semiconductor stocks following an aggressive rebound from a recent AI-driven selloff.
In Seoul, Samsung Electronics Co Ltd (KS:005930) slipped 0.9% while SK Hynix Inc (KS:000660) declined 4.3%. In Taipei, MediaTek Inc (TW:2454) lost 1.4%. Not every large technology name moved lower: Taiwan’s Hon Hai Precision Industry Co Ltd (TW:2317), Nvidia’s largest AI server assembly partner, rose 0.6% after reporting record June and second-quarter revenue attributed to strong AI server demand. Taiwan Semiconductor Manufacturing Co. also managed a modest advance of 0.6%, but gains among heavyweight exporters were insufficient to lift the broader Taiwan Weighted index, which was effectively flat.
Bank of America interpreted the recent correction in AI-linked equities as a positioning reset rather than an indication of deteriorating fundamentals, saying spending on AI infrastructure remains supported even as investors grow more selective after the sector’s strong run-up.
Selective gains supported by lower oil, easing tensions
Outside the semiconductor sector, sentiment found support from lower oil prices and reduced geopolitical risk after a ceasefire was reported between Israel and Iran last month. With concerns about disruptions to shipping through the Strait of Hormuz receding and major producers restoring output, oil's subdued profile helped improve the inflation outlook across global markets.
That backdrop coincided with gains in several regional markets: Hong Kong’s Hang Seng rose 1.1%, Indonesia’s Jakarta Stock Exchange Composite Index added 0.8%, and Australia’s S&P/ASX 200 was little changed.
Focus shifts to Fed minutes, earnings and regional data
Investors are also turning to the upcoming quarterly earnings season to assess whether heavy investments into AI infrastructure are beginning to translate into stronger corporate results and sustained profit growth. The recent rebound in chipmaker shares followed a two-day rout, and market participants will be looking for evidence that the billions being deployed into AI are producing tangible revenue and margin benefits for related vendors and service providers.
Regional macro data will add to the picture this week. DBS expects Bank Negara Malaysia to keep its policy rate unchanged, and several inflation readings are due from Thailand, China, Taiwan and the Philippines. DBS’ outlook anticipates inflation accelerating in Thailand, remaining broadly steady in China and Taiwan, and easing only slightly in the Philippines. Taiwan’s June trade figures are also in focus for indications that AI-related demand continues to underpin technology exports.
Takeaway
The market narrative entering the midweek period centers on profit-taking in semiconductor names after last week’s recovery, while lower oil prices and reduced geopolitical strain provide selective support. Fed minutes and a heavy calendar of regional economic data and corporate earnings will likely shape the next directional cues for Asian markets.