Journal du Club des Cordeliers - Tech back in fashion as Asian markets extend rebound

After spending four weeks unloading their positions over fears that the AI-led rally had come to a shuddering halt, investors were piling back into the sector to extend a rebound that began in breathtaking fashion Friday.

Strong earnings and positive forecasts from market heavyweights including Amazon, Microsoft and data-mining giant Palantir have injected fresh interest in tech, helping overcome worries about massive spending on artificial intelligence and when that will see a return.

All three main indexes on Wall Street chalked up gains Tuesday, with the S&P 500 and Dow hitting records -- while there were also new peaks for Paris, Milan, Frankfurt and Madrid.

That optimism filtered through to Asia, where Seoul -- which has been at the forefront of extreme volatility in the tech sector over the past month -- climbed more than four percent.

Tokyo, which has also benefited from the AI boom, was up three percent, while Taipei added a little more than that.

There were also gains in Hong Kong, Shanghai, Sydney, Wellington and Jakarta.

The gains come as a relief to traders after a wave of tech selling, which was also linked to worries of higher US interest rates, saw Seoul fall more than 40 percent from its June record high.

The losses were led by chipmakers SK hynix and Samsung, which collapsed up to 50 percent from their own peaks.

Friday's rebound -- the Kospi surged almost 18 percent and SK hynix 30 percent -- came on the back of bargain-buying and positive earnings among other things.

Gains have been helped this week by hopes that the US-Iran truce will be reset after weeks of tit-for-tat strikes.

Crude tumbled more than five percent Tuesday -- and are down more than 10 percent this week -- after US Treasury Secretary Scott Bessent said a deal could be reached imminently with Tehran on re-opening the Strait of Hormuz to shipping traffic.

He told CNBC television that "I think there is a chance we may have a deal today or tomorrow to open the strait" -- a key sticking point in ceasefire talks.

"I'd expect the energy prices to settle back down, which, as I said, will be good for the entire world."

The Brent and West Texas Intermediate crude contracts fell again Wednesday.

"The past few sessions have been pivotal for financial markets, largely thanks to signs of diplomatic progress around the Strait of Hormuz," wrote Julian Pineda at City Index.

He said officials' comments regarding progress in talks "has had a direct impact on market confidence. With geopolitical uncertainty easing, WTI crude has slipped below the $80 mark, helping to dial back fears of global inflation.

"This, in turn, eases concerns about aggressive central bank rate hikes, clearing the way for risk appetite to recover."

And IG Markets' Tony Sycamore said "the balance of risks appears to be becoming more skewed back to the upside".

The drop in oil prices helped ease concerns about inflation and saw traders lower their expectations for the Federal Reserve to hike interest rates, according to Bloomberg.

Investors are keeping tabs on the release this week of crucial US jobs data that should provide them with a fresh idea about the state of the economy, and guide the Fed as it considers its next move.

- Key figures around 0230 GMT -

Tokyo - Nikkei 225: 3.0 percent at 65,861.00 (break)

Hong Kong - Hang Seng Index: UP 0.2 percent at 25,913.11

Shanghai - Composite: UP 0.6 percent at 3,845.76

Seoul - Kospi: UP 3.8 percent at 6,598.49

West Texas Intermediate: DOWN 1.1 percent at $74.94 per barrel

Brent North Sea Crude: DOWN 0.7 percent at $78.80 per barrel

Dollar/yen: DOWN at 157.47 yen from 157.72 yen on Tuesday

Euro/dollar: UP at $1.1535 from $1.1533

Pound/dollar: UP at $1.3456 from $1.3453

Euro/pound: UP at 85.74 pence at 85.73 pence

New York - DOW: UP 1.7 percent at 54,085.88 (close)

London - FTSE 100: UP 0.2 percent at 10,879.38 (close)

M.Morel--JdCdC