Key Takeaways
- South Korean chipmakers SK Hynix (000660) and Samsung Electronics (005930) surged up to 30%, triggering a massive 17% rally in the KOSPI index as investors returned to the AI sector following a brutal three-day sell-off.
- Gold prices struggled to maintain intraday gains, pressured by a strengthening U.S. Dollar as escalating U.S.-Iran tensions revived expectations for a potential Federal Reserve rate hike in September.
- HSBC raised its price target for Shell (SHEL) to 3,650p, citing robust cash flow and a massive £3.1 billion share buyback program fueled by high energy prices.
- Russia reported striking a vessel carrying military supplies near the Ukrainian port of Odesa, heightening risks to Black Sea shipping lanes and grain exports.
- Japan’s housing starts for June rose 18.6% year-over-year, significantly outperforming analyst estimates of 12.7% and signaling resilience in the domestic construction sector.
South Korean Tech Giants Lead Record Market Recovery
South Korea’s benchmark KOSPI index staged a historic recovery on Friday, jumping 17% to reclaim the 6,500 level. The rally was spearheaded by SK Hynix (000660), which hit its 30% daily trading limit, and Samsung Electronics (005930), which surged over 21%.
The rebound follows a period of extreme volatility where the KOSPI lost nearly a quarter of its value in July. Investors were encouraged by strong earnings from U.S. tech giants like Microsoft (MSFT), which eased fears that the massive capital expenditure on Artificial Intelligence (AI) was failing to generate immediate returns.
Geopolitical Tensions Revive Fed Hike Bets
Gold prices remained under pressure, trading near $4,080 per ounce as the U.S. Dollar strengthened. The primary driver was a resurgence in U.S.-Iran hostilities, which has fueled concerns over energy-driven inflation.
Market participants are now pricing in a 63% chance of a Federal Reserve rate hike in September, up from previous weeks. This hawkish shift has dampened the appeal of non-yielding bullion, despite its traditional status as a safe-haven asset during times of war.
Energy Sector Strength and Maritime Risks
In the energy sector, HSBC analysts upgraded their outlook for Shell (SHEL), raising the price target from 3,500p to 3,650p. The bank highlighted Shell's superior cash generation, which allowed the company to maintain a $3 billion quarterly buyback pace despite broader market uncertainty.
Meanwhile, the conflict in Eastern Europe continues to threaten global supply chains. The Russian Defence Ministry claimed its forces hit a cargo vessel en route to Odesa that was purportedly carrying military equipment. This follows a string of attacks on merchant shipping in the Black Sea, which analysts warn could further destabilize global wheat and commodity prices.
Japan’s Housing Sector Shows Surprising Resilience
Economic data from Japan provided a positive surprise as June housing starts grew by 18.6% year-over-year. While this was a deceleration from May’s 33.9% surge, it comfortably beat the consensus estimate of 12.7%.
The annualized housing starts reached 0.786 million units, exceeding the previous month's 0.750 million. This data suggests that despite the Bank of Japan's recent moves toward monetary normalization, the domestic real estate and construction markets remain on a growth trajectory.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.