Asian markets experienced severe declines on Friday as continued drops in computer chip companies sent indexes sharply lower across the region. South Korea's Kospi index sank 0.5% to temporarily trade at 7,609.70 points, marking a near half-month low, while Japan's Nikkei 225 opened flat and trended downward, falling another 1.4% to temporarily trade at 67,769.98 points, hitting its lowest level since June 15. Indexes also fell 2.5% in Tokyo and 2% in Shanghai, while European indexes were stronger, with France's CAC 40 rallying 1.7%. The sharp decline came despite earlier reports showing Japan's Nikkei 225 had declined 0.86% and South Korea's Kospi had slipped 0.46% in the previous session, as investors weighed signs of easing inflationary pressures against continued weakness in technology shares.
Lower oil prices and softer U.S. jobs data have strengthened expectations that the Federal Reserve may keep interest rates unchanged. The S&P 500 finished virtually unchanged, edging up by less than 0.1%, even though seven out of every 10 stocks within the index rose. The Dow Jones Industrial Average rallied 594 points, or 1.1%, to a record close of 52,900.07, while the Nasdaq composite dropped 0.8% to 25,382.67 after erasing early gains. As reported by Associated Press, traders now see an 82% chance that the Fed and its new chairman, Kevin Warsh, will not raise the federal funds rate at its next meeting later this month, up from the 71% chance seen a day earlier according to CME Group data. The weaker-than-expected U.S. jobs data showed employers added 57,000 jobs last month, which was short of the 100,000 jobs economists expected and a slowdown from May's hiring pace.
Individual stock performance showed mixed results across sectors during the Asian trading session on July 3. South Korean heavyweights outperformed Japanese stocks, with Samsung Electronics surging 9,000 won at the open, approaching the 300,000 won threshold with a 2.97% gain, temporarily trading at 296,000 KRW. SK Hynix rose 1.19% to temporarily trade at 2,213,000 KRW, while SoftBank fell 5.28% to temporarily trade at 5,868 JPY. Kioxia tumbled 8.6%, briefly slipping below the 70,000 level to temporarily trade at 69,700 JPY, touching its lowest level since June 11. These chip companies have come under pressure due to worries that their stock prices shot too high in the AI frenzy and that all the spending on chips and data centers may not result in as much profit and productivity growth as hoped. Memory maker Micron Technology erased an early gain to drop 5.5%, a day after plunging 10.6%, while Nvidia fell 1.4% and Lam Research sank 10.2%.
Oil prices showed mixed movements as crude shipments through the Strait of Hormuz continued to recover and diplomatic efforts between the United States and Iran progressed. Brent crude settled at $71.80 per barrel, up 0.3% after dropping in the morning but paring losses as the day progressed. According to Associated Press, oil prices had been under pressure due to the war with Iran, but now that oil prices are back below where they were before the war, if inflation slows in upcoming months, the Federal Reserve may feel less need to raise interest rates several times this year. The yield on the 10-year Treasury fell to 4.48% after the release of the U.S. hiring data, down from the 4.50% level reached in the morning and significantly lower than the 4.97% level before the war.
Gold held on to recent gains as softer U.S. employment data reduced expectations that the Federal Reserve would need to raise interest rates this year. Bullion traded around $4,130 an ounce after recording its strongest daily advance in three weeks during the previous session. As reported by Bloomberg, the U.S. bond market also reflected changing interest-rate expectations, with short-term Treasury yields declining after the jobs report and weaker oil prices reinforced the view that policymakers could delay further policy tightening.
