Zürcher Nachrichten - Seoul extends losses as most Asian markets drop, oil rises again

Seoul's Kospi rallied as much as five percent in the morning session, having been hammered in the previous two sessions by a plunge in heavyweight chipmakers SK hynix and Samsung Electronics amid questions over the AI boom.

But the recovery soon petered out as traders continued to cut their losses, just a month after celebrating record highs for the South Korean market and the two tech giants.

They had been buoyed by Samsung posting a 1,813 percent jump in second-quarter operating profit, which was fuelled by sustained AI-driven demand for memory chips.

It also said revenue surged 130 percent and net profit 1,300 percent. The results met expectations, South Korea's Yonhap news agency said, citing its own financial data firm.

Concerns over the vast sums pumped into the artificial intelligence sector over the past two years, and when or if investors would see a return, have dogged markets for much of the past year but have peaked in recent weeks.

By the end of Thursday's trade, the Kospi was down more than one percent, having lost around 15 percent over the previous two days. SK hynix shed more than five percent, leaving it around 25 percent down since Monday's close. Samsung was also slightly lower.

The selling came despite South Korea's government pledging to introduce measures to curb retail traders' access to leveraged exchange-traded funds, including limits on individuals' investment in them.

"Participants agreed that concentrated trading in single-stock leveraged products has contributed to heightened market volatility and pledged to respond swiftly and decisively," the finance ministry said in a statement.

There were also losses in Shanghai, Sydney, Singapore, Taipei, Wellington, Bangkok and Manila.

However, Tokyo, Hong Kong, Mumbai and Jakarta edged up.

- 'Hitting them hard' -

Traders were also on edge after the US announced "powerful" strikes on Iran in retaliation for Tehran's attacks on US bases in Jordan as the Middle East war reignited and drew in the Islamic republic's proxies.

The strikes dashed hopes of an immediate return to negotiations.

Saudi Arabia and the United States also announced attacks Wednesday on militant bases in Iraq, while Israel accused Iran-backed Hezbollah of a truce violation.

Iran launched missiles at Jordan, with Iranian state media later reporting an American attack near its border with Iraq.

Earlier, US President Trump told Fox News: "We'll be hitting them hard... We are going to beat the 'effing s' out of them."

Oil prices climbed more than one percent, having surged Wednesday when Brent climbed more than eight percent.

Uncertainty about the Federal Reserve's plans for interest rates also weighed on sentiment after officials stood pat at their latest meeting but three policymakers dissented by calling for a hike.

The decision came amid fears about elevated inflation and the impact of the Middle East war on energy prices.

Bank boss Kevin Warsh said: "We are on the job. We will deliver. We are focused like a laser, making sure we can do it."

He also cautioned there was "no magic wand" with which the Fed could lower inflation quickly.

"Despite three committee dissents in favour of a July hike, Chair Warsh stopped short of flagging an imminent hike, echoing June's tone," said IG's Fabien Yip.

"That is starting to unsettle investors: a Fed unwilling to commit to further tightening raises the question of whether it can keep long-term inflation expectations anchored."

And SPI Asset Management's Stephen Innes added that the dissents "were the more consequential signal".

"This was not a committee comfortably waiting for inflation to subside," he wrote.

"A quarter of its voting members believed the threshold for another increase had already been crossed, despite softer recent data, renewed geopolitical uncertainty and a sharp deterioration across several risk-sensitive markets."

Analysts said a spike in 30-year Treasury yields signalled traders were sceptical and the only way to get inflation back to the Fed's two percent goal was to hike rates.

- Key figures around 0715 GMT -

Seoul - Kospi: DOWN 1.2percent at 5,593.56 (close)

Tokyo - Nikkei 225: UP 0.7 percent at 61,867.43 (close)

Hong Kong - Hang Seng Index: UP 0.2 percent at 25,869.03

Shanghai - Composite: DOWN 0.6 percent at 3,804.69 (close)

London - FTSE 100: FLAT at 10,903.86

West Texas Intermediate: UP 1.2 percent at $85.47 per barrel

Brent North Sea Crude: UP 2.5 percent at $92.96 per barrel

Dollar/yen: UP at 163.59 yen from 163.47 yen on Wednesday

Euro/dollar: DOWN at $1.1449 from $1.1457

Pound/dollar: DOWN at $1.3349 from $1.3350

Euro/pound: DOWN at 85.77 pence at 85.78 pence

New York - DOW: DOWN 2.2 percent at 51,594.14 (close)

A.Weber--NZN