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Asian Stocks Rise on Alphabet's AI Spending, but Oil Rally Limits Gains
Summary
Asian markets, led by South Korean chipmakers, advanced after Alphabet boosted its AI spending forecast. Gains were capped by a surge in oil prices following new tensions in the Middle East, which revived inflation concerns.
Most Asian stock markets advanced on Thursday, led by a rally in semiconductor shares after Alphabet announced a significant increase in its artificial intelligence spending forecast. However, broader gains were tempered by a sharp rise in oil prices, which renewed concerns over global inflation.
AI Spending Lifts Tech Sector
Investor sentiment was buoyed after Google's parent company, Alphabet, raised its annual capital spending forecast by an additional $15 billion, signaling that heavy investment in AI infrastructure remains a priority. The news provided a strong tailwind for Asian technology firms integral to the AI supply chain.
South Korea’s KOSPI was a regional outperformer, climbing 3%. The gains were driven by its heavyweight chipmakers:
- SK Hynix Inc. and Samsung Electronics Co. Ltd. both jumped on expectations of higher demand for their high-bandwidth memory (HBM) and other components used in AI servers.
Supporting the positive mood, new data showed South Korea’s economy grew 3.7% year-on-year in the second quarter, beating expectations of 3.5%, largely due to strong semiconductor exports. Elsewhere, Japan’s Nikkei 225 rose 0.4%, and Hong Kong’s Hang Seng index added 1.3%.
Oil Prices and Inflation Concerns Cap Gains
AdThe optimism in the tech sector was partly offset by rising energy costs, which weighed on broader market sentiment. Crude oil prices climbed to six-week highs after Yemen's Iran-aligned Houthis claimed attacks on two Saudi oil tankers in the Red Sea, according to reports.
The escalation heightened fears of potential disruptions to global energy supplies. Higher oil prices can fuel inflation, prompting investors to reassess the outlook for central bank interest rate policies. This risk-off sentiment contributed to modest losses in mainland China, where the Shanghai Composite and the blue-chip CSI 300 both declined by 0.2%.
Australian Labor Market Heats Up
In Australia, the S&P/ASX 200 closed 0.7% higher, with investor focus on strong domestic economic data. The country’s labor market showed unexpected strength, adding 76,300 jobs in June, far exceeding forecasts for a 16,400 increase. The unemployment rate held steady at 4.4%.
The robust report has increased market expectations that the Reserve Bank of Australia (RBA) may implement another interest rate hike before the end of the year to curb persistent inflation. Investors are now awaiting next week's quarterly inflation figures for further clues on the RBA's policy path.
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