GGMA Markets Briefing: Samsung profit soars 19-fold but shares slump as chip selloff crashes the KOSPI
Global markets sold off as a deepening semiconductor rout crashed Korean equities. The slide reignited fears that the AI-driven rally has run ahead of itself. Samsung reported a blockbuster profit beat on booming AI-memory demand. Its shares still slumped. Investors judged the beat already priced and turned to the longer-term memory cycle. "The market is in the process of levelling the valuation playing field," said Tim Waterer, chief market analyst at KCM Trade (BBG). Investors are spreading their bets into other sectors, tempering the earlier euphoria in high-beta tech names, he said.
The Kospi crashed 8.03%, with SK Hynix sliding into its US listing. Nikkei futures fell 2.14%. Nasdaq-100 futures dropped 1.08%, suggesting Monday's Wall Street rebound was losing momentum (Investing). The CSI 300 fell 0.83%, and the Hang Seng slipped 0.42%. Chip-stock volatility is the highest since 2020 (BBG).
Central-bank signals leaned hawkish. Fed Governor Waller said high inflation is the chief risk facing the Fed, given a still-solid labour market (Investing). (BBG). In Europe, the ECB's Schnabel warned that the Iran shock is not over. Lane stressed a data-dependent approach (Reuters).
In currencies, the dollar held firm. The yen was a touch stronger at 161.73, a modest safe-haven bid. Positioning showed hedge funds the most bearish on the currency since 2007 (WSJ). Traders are now the most positive on the dollar in over a decade as they weigh a possible hike rather than cuts. (BBG) The won firmed even as Korean equities crashed.
In rates, US Treasuries edged lower. The 10-year yield rose about 1.0 basis point to 4.481% as the hawkish Fed tone and dollar bid weighed (Investing). Japanese government bonds held firm. The 10-year JGB yield was little changed at 2.824%. The 30-year auction drew the strongest demand since 2019, and Japan has driven Asian offshore bond issuance to a record (BBG).
In commodities, oil bucked the risk-off tone. WTI rose 0.63% after Iran fired missiles at ships in the Strait of Hormuz and a laden LNG tanker was struck off Oman (WSJ). Gold slipped for a second day, down 0.88%, on the firmer dollar and Fed-hike bets (BBG). Silver fell 1.73%, and copper lost 0.50%. In crypto, Bitcoin dropped 1.51% to about 63,036 with the risk-off tide.
On the data run, Japan's May household spending beat sharply. It fell just 0.4% year-on-year against a 2.3% drop expected, and jumped 3.7% on the month. Nominal wage growth cooled to 3.2%, a touch below the 3.4% consensus. It still held above three per cent for a third straight year, the longest streak since 1992 (BBG).
On the corporate tape, big tech signalled cost discipline. Microsoft is cutting thousands of jobs, including about a fifth of its Xbox unit. Toyota will expand a US plant. Canada picked Germany's TKMS for its largest-ever submarine order, a blow for Korea's shipbuilders (BBG).
Tuesday is a Bank of England financial stability day. The FPC's July Financial Stability Report lands at 11:30 CET, with Governor Bailey's press conference an hour later at 12:30 CET. The most hawkish MPC voice, Catherine Mann, is pencilled in for the evening. The data is second-tier and backwards-looking. German industrial production for May (08:00 CET) should confirm a manufacturing sector still treading water; the US goods-and-services trade balance (14:30 CET) is expected to widen sharply as the tariff-front-running unwind reverses, a drag on Q2 GDP. Canada's May trade balance and June Ivey PMI round out the North American afternoon. In politics, the NATO summit runs through 8 July, and a French appeals court rules on Marine Le Pen's presidential eligibility today.
Looking ahead, Wednesday brings the June FOMC minutes, the first under Chair Warsh, and the RBNZ decision, where a hike now looks less of a slam dunk (BBG). The ECB's June account and China's CPI follow on Thursday. Canadian jobs come on Friday.
Time Stamp: 06:51 CET