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Asian stock markets traded mixed on Monday as investors struggled to extend last week’s recovery in technology shares, while attention shifted to the upcoming corporate earnings season and oil prices eased on improving supply conditions in the Middle East.
Investor sentiment improved late last week after weaker-than-expected US jobs data eased concerns that the US Federal Reserve could raise interest rates in the near term, triggering a rebound in regional equities led by South Korea.
However, caution returned on Monday as technology stocks resumed their volatile trading, reflecting lingering concerns over whether the rapid rise in artificial intelligence (AI)-related shares has outpaced underlying fundamentals.
Seoul’s Kospi index reversed early gains to fall more than 2 percent, while Tokyo’s Nikkei 225 also traded lower. Singapore and Sydney slipped, whereas Hong Kong, Shanghai, Wellington and Taipei posted modest gains.
The AI sector remains the market’s primary driver, with investors closely watching whether companies can generate returns from the massive investments made in the technology.
Major US technology companies, including Alphabet, Amazon, Meta and Microsoft, are expected to invest more than $725 billion in AI this year, raising questions over profitability and valuations.
Providing a boost to sentiment, Taiwan’s Hon Hai Precision Industry, better known as Foxconn, reported stronger-than-expected sales for the April-June quarter and forecast continued growth.
The company, which manufactures AI servers for Nvidia in addition to assembling Apple iPhones, saw its shares climb more than 6 percent in Taipei trading.
Markets are now turning their attention to the corporate earnings season, with investors looking for updates on AI spending plans and business outlooks.
Investors are also awaiting the Wall Street debut of South Korean memory chipmaker SK hynix, which is set to launch a $29 billion listing later this week.
Meanwhile, oil prices extended losses as more tankers safely transited the Strait of Hormuz, easing immediate concerns over supply disruptions. Optimism surrounding ongoing US-Iran peace efforts also weighed on crude prices.
Analysts cautioned, however, that lower oil prices may not immediately ease inflationary pressures.
Stephen Innes of SPI Asset Management said the economic effects of energy prices typically emerge gradually through higher transport costs, corporate expenses and consumer prices.
Bank J. Safra Sarasin Chief Economist Karsten Junius said oil exports remain below pre-conflict levels and supply bottlenecks are likely to persist, forecasting crude prices to stabilise between $75 and $80 per barrel over the next year, potentially keeping inflation elevated.
By mid-morning trading, Tokyo’s Nikkei was down 1.2 percent, Seoul’s Kospi had fallen 2.4 percent, while Hong Kong’s Hang Seng Index and Shanghai Composite were modestly higher. Brent crude slipped to around $71.93 a barrel, while US West Texas Intermediate traded near $68.64.