Stock markets in the Asian region recorded mixed performance at the beginning of this week, with the technology sector being the main focus of investors' attention. The Nikkei 225 index in Japan and the Kospi in South Korea experienced selling pressure, correcting by 1.2% and 2.4% respectively due to sharp fluctuations in tech-based stocks. Conversely, Chinese and Hong Kong stock markets showed a more stable performance with slight gains in the Shanghai Composite and Hang Seng indices.
Artificial Intelligence (AI) remains the dominant catalyst for market growth. However, this optimism is beginning to be overshadowed by investor doubts regarding the timeline for realizing returns from the massive investments that have been poured in. Tech giants like Alphabet, Amazon, Meta, and Microsoft are projected to spend more than 725 billion US dollars this year on AI research and development. The upcoming second-quarter financial reports will be a crucial benchmark to prove the effectiveness of these investments.
Amid market challenges, Foxconn recorded a stellar performance with its stock rising over 6% after reporting second-quarter earnings that beat expectations. The iPhone assembler is now increasingly expanding into the AI server sector for Nvidia, as well as venturing into the robotics and electric vehicle industries. In addition, market focus is now on Samsung Electronics and SK hynix, which are predicted to post significant profit surges thanks to high demand for memory chips for AI infrastructure.
Global macro sentiment also influenced the direction of market movements, especially regarding the direction of the Federal Reserve's monetary policy. Moderate US labor data and falling energy prices increased market confidence that the US central bank will hold interest rates at the meeting in late July. ANZ Bank analyst, Richard Yetsenga, assessed that a short-term rate hike seems unlikely, although the Fed is expected to remain cautious to maintain inflation stability.
Investors are currently preparing to monitor the Fed minutes as well as statements from central bank officials at the European Central Bank conference to get signals on future policy. Meanwhile, in the domestic market of Vietnam, the VN-Index and HNX-Index also experienced correction pressure, reflecting market participants' caution amid regional sentiment uncertainty.
