Tech Sector Volatility Continues, Korean Stocks Fall 1.5% Under Pressure, Yen Rally Ends, Oil Prices Rise Slightly

Asia-Pacific stock markets moved counter to the rally in Wall Street tech stocks on Tuesday, as uncertainty surrounding the outlook for AI trades continued to suppress market sentiment. The yen retreated after a four-day rise driven by intervention expectations.

The Korea Composite Stock Price Index (Kospi) fell 1.5%, having earlier risen as much as 2.1% during the session. The MSCI Asia Pacific Index dropped 0.7%, with eight of its eleven sectors posting losses. Nasdaq 100 futures rose 0.4%. Palantir Technologies surged 14% in after-hours trading after raising its earnings guidance, while Amazon fell 1.6% in after-hours trading after Chairman Jeff Bezos disclosed a plan to reduce his holdings.

Speaking to reporters in the Oval Office, Trump stated that the U.S. and Iran are engaged in dialogue, describing the negotiations as Iran's "last chance before a decapitation strike," and expressed hope for the complete reopening of the Strait of Hormuz. These remarks pushed West Texas Intermediate crude prices up 0.8% to around $81 per barrel, after oil prices had plummeted more than 5% the previous day. U.S. Treasury bonds also gave back some of the previous day's gains, with the yield on the 10-year note rising 2 basis points to 4.69%.

Market focus is highly concentrated this week. SpaceX is set to release its first earnings report since listing on Tuesday, and as many as $116 billion worth of shares are expected to become tradable for the first time next month, constituting one of the largest share unlock events in capital market history. Meanwhile, the U.S. non-farm payrolls data released on Friday will serve as a key reference for investors assessing the Federal Reserve's interest rate path.

• The Korea Composite Stock Price Index (Kospi) fell 1.5%, having earlier risen as much as 2.1% during the session.
• Nasdaq 100 futures rose 0.4%.
• The yen fell 0.3% to 157.64 per dollar, ending a four-day winning streak.
• Following the results of the Japanese government bond auction, the yield on Japan's 10-year government bond rose 5 basis points to 2.87%.
• The yield on the U.S. 10-year Treasury note rose 2 basis points to 4.69%.
• West Texas Intermediate crude prices rose 0.8% to around $81 per barrel, after oil prices had plummeted more than 5% the previous day.
• Spot gold rose 0.13% to $4,060.41.

Asia-Pacific Markets Under Pressure, Tech Sector Volatility Continues

The MSCI Asia Pacific Index fell 0.7%, with eight of its eleven sectors posting losses. The index has declined for two consecutive sessions after surging 5% last Friday. The regional semiconductor index dropped 1%, and the Korea Composite Stock Price Index (Kospi) fell 1.5%, reversing an earlier intraday gain of 2.1%. The significant volatility highlights the ongoing divergence in market views on the AI investment theme.

In contrast, sentiment on Wall Street remained relatively optimistic. Nasdaq 100 futures rose 0.4%. Palantir Technologies surged 14% in after-hours trading after raising its earnings guidance, while Amazon fell 1.6% in after-hours trading after Chairman Jeff Bezos disclosed a plan to reduce his holdings. Amazon had benefited from a three-day rally, with its market capitalization reaching $3 trillion on Monday.

The high volatility in AI trades has begun to impact the asset management industry. According to Bloomberg, a hedge fund under Coatue Management fell 8.3% last month due to severe fluctuations in AI stocks, making it another tech-themed fund manager to suffer heavy losses.

Yen Retreats, Demand for Japanese Government Bonds Hits Recent Low

The yen fell 0.3% to 157.64 per dollar, ending a four-day winning streak. The yen appreciated rapidly in early trading on Monday, with market rumors suggesting authorities had intervened again, continuing the policy signals from the joint U.S.-Japan intervention action last week.

The Japanese government bond market was also under pressure. Futures on 10-year Japanese government bonds fell, and demand at the auction for 10-year bonds held on the day was the weakest since May 2025, complicating market expectations for Japan's interest rate trajectory.

Employment Data and SpaceX Earnings Become Week's Biggest Catalysts

Market participants are currently in wait-and-see mode. Billy Leung, Investment Strategist at Global X Management, stated:

"Investors are effectively waiting for data to provide clearer guidance on the direction of interest rates, rather than trading based on rhetoric. The U.S. non-farm payrolls data on Friday is the next real test."

Fabien Yip, Market Analyst at IG International in Sydney, also pointed out: "Investors are remaining cautious ahead of the SpaceX earnings report and the employment report, while also digesting the complex signals coming from the Middle East situation."

Data released on Monday showed that U.S. manufacturing activity expanded at its fastest pace in over four years in July, with output rising significantly and businesses adding jobs simultaneously. This provided a positive leading signal for the labor market.

Bullish Logic for U.S. Stocks Unchanged, Market Shifts from Liquidity-Driven to Fundamentals-Led

Wall Street saw a strong rebound the previous day, with large-cap indices recording their best single-day performance since March. The S&P 500 closed near historic highs, and the semiconductor index rose about 1%.

Scott Rubner of Citadel Securities believes that the core drivers pushing U.S. stocks to new highs this year remain "firmly in place," and the contraction in retail speculative trading does not change the overall upward logic. He wrote in a research note: "The market is shifting from a liquidity-driven environment to one increasingly dominated by earnings, corporate demand, and the macroeconomic backdrop."

Chris Larkin of E*Trade (a subsidiary of Morgan Stanley) warned that the intermittent nature of U.S.-Iran diplomatic tensions means that this week's earnings data and employment reports will have to bear more of the "burden of proof" for the bullish camp.

Spot gold rose 0.13% to $4,060.41.