The Zhitong Finance App learned that on Tuesday, the Asian stock market ended three consecutive trading days of decline as the Middle East mediated efforts to push oil prices back down from a one-month high. Meanwhile, investors are preparing for the upcoming corporate earnings season to test whether the artificial intelligence (AI) investment theme currently under pressure continues to have momentum.
On the stock market side, the MSCI Asia Pacific Stock Index, excluding Japan, rose more than 2%, ending the previous three consecutive trading days of decline. The Japanese and South Korean stock markets closed sharply higher. The Nikkei 225 Index rose 3.26%, Kioxia surged 14%, and SoftBank rose 6.1%. The Korea Composite Index (KOSPI) rose 3.56%, SK Hynix closed up 4%, and Samsung Electronics rose 6.1%. The four major A-share indices collectively surged. Meanwhile, as of press release, futures on the three major US stock indices have risen sharply.
In recent weeks, global stock markets have continued to fluctuate sharply, dragged down by the pullback in technology stocks, led by chip stocks. Investors' concerns about overvaluation, the prospects for profit growth, and whether huge investments in AI infrastructure will eventually bring tangible returns continue to heat up.
Regarding the Asian stock market rally on Tuesday, Charu Chanana, chief investment strategist at Saxo Bank, said, “This is more like a technical rebound than a sign that the risk has been completely lifted. If oil prices remain under control and technology companies' financial reports can verify AI capital expenditure logic, then the rebound is expected to continue, but both of these assumptions are still very weak.”
According to reports, at a time when the situation in the Middle East is escalating, all parties are trying to restore the fragile cease-fire agreement. The report said that Qatar, Egypt, Pakistan and other mediators have proposed a 10-day cease-fire to the US and Iran. The Trump administration is studying the possibility of a cease-fire and is preparing for an all-out war. The report quoted sources in the Middle East region as saying, “We told the US and Iran to suggest establishing a cooling-off period.”
The report said that the US military may continue bombing Iran for several days before seriously considering the proposal. While studying the 10-day cease-fire proposal, the Trump administration also urged Israel not to “close the diplomatic window.”
The report pointed out that if the US and Iran reach a 10-day cease-fire agreement, the two sides will begin negotiations on long-term arrangements for the Strait of Hormuz during this period. One of the negotiation plans would allow Iran to charge “reasonable service fees” for maritime safety, environmental protection, etc. Another option would be to remit the relevant costs into a joint fund managed by the International Maritime Organization.
As investors hoped that the situation in the Middle East would ease, Brent crude oil futures fell more than 1% to $88.27 per barrel as of press release. On the previous trading day, Brent crude oil futures rose to 91.42 US dollars per barrel, the highest level in a month.
Nick Tweedale, ATFX Global's chief market strategist in Sydney, said: “I think the current situation is very strange. Investors are still trying to stay optimistic because we experienced a similar situation a few months ago, and they want the final results to be repeated.”
However, Tweedale said that market concerns about the situation getting out of control and the further spread of the conflict to the entire Middle East region are bound to continue to heat up. “I think that as long as one more trigger appears, market sentiment may quickly get out of control, and the situation will rapidly escalate.”
Meanwhile, investors are focusing on the upcoming results of tech giants such as Google (GOOGL.US) and Intel (INTC.US) to determine whether the AI investment theme still has room for further growth in the context of the market's high expectations for second-quarter profits.
Against the backdrop of escalating geopolitical turmoil and a sharp correction in AI transactions, the performance and future prospects of these tech giants will be a key pricing threshold for testing “whether unprecedented AI computing power capital expenditure can be converted into actual revenue, cash flow, and return on investment”, and will determine whether the current wave of AI trading sell-off is nearing its end.
Although Samsung Electronics and TSMC have previously announced strong results, they have failed to meet investors' high expectations, which highlights the challenges facing the entire industry. Fred Neuman, chief Asian economist at HSBC Hong Kong, said, “Although demand for AI hardware is still extremely hot, and it is difficult for companies to even meet market demand, investors' expectations for profit performance are getting higher and higher, so the entire industry may be impacted even by slightly lowering performance expectations.”
As the tension between the US and Iran escalates, market concerns about inflation are heating up again and driving up US Treasury yields. Neuman added: “The macroeconomic environment is also becoming more complex. Higher energy prices and higher interest rates make the economic outlook even more challenging, and suggest that even the AI hardware industry is not completely immune to these macroeconomic factors.”