Asian stocks attempt rebound after brutal week of AI-driven selloffs

Asian stock markets struggled to find direction on Thursday as a week of brutal AI-related selloffs and a divided Federal Reserve decision left investors rattled, with South Korea's Kospi on track for a roughly 12% weekly decline after more than a trillion dollars was erased from the country's market value.

Chipmaker Rout and Signs of Stabilization

The broad MSCI Asia-Pacific ex-Japan index rose more than 1% in early Thursday trading, offering tentative relief after shedding 3.6% on Tuesday alone. Japan's Nikkei 225 gained about 2%, though it remained set for a weekly decline of roughly 3%. The Kospi rose 4% in choppy Thursday trade but remained deep in the red for the week after plunging more than 10% on Tuesday, triggering a brief market halt.mezha+1

Samsung Electronics, which along with SK Hynix ↗ 4.08% accounts for more than half of the Kospi's weighting, reported a record second-quarter operating profit of approximately 89.4 trillion won ($58.4 billion), a roughly 19-fold jump year-over-year. Despite the blowout numbers, investor anxiety over AI valuations and intensifying competition from China has overwhelmed positive earnings signals. SK Hynix shed almost 20% during the week despite announcing strong profits.freemalaysiatoday+3

South Korean Finance Minister Koo Yun-cheol apologized for the implementation of leveraged strategies on individual stocks, as retail investor margin levels in Taiwan and Korea continued to trend lower.mezha

Fed Holds Rates but Markets See Mixed Signals

The Federal Reserve held interest rates steady on Wednesday in a split decision, with some policymakers pushing for a hike to combat inflation running at 3.5%. During his press conference, Fed Chair Kevin Warsh pledged to return inflation to the 2% target but declined to offer specific forward guidance.freemalaysiatoday+1

The yield on the 30-year U.S. Treasury climbed to 5.22%, its highest level since June 2007. "If you really want to get to 2%, I think you have to raise interest rates," DoubleLine CEO Jeffrey Gundlach told CNBC. "The bond market vigilantes are saying, 'If you really want us to believe your rhetoric, you've got to start acting'".mezha+1

Oil and Geopolitical Pressures Add to Uncertainty

Brent crude slipped below $90 a barrel on Thursday after surging nearly 8% the previous session following fresh attacks in the Middle East. International benchmark prices had spiked after Iran launched ballistic missiles and tensions over passage through the Strait of Hormuz escalated.ddnews+2

Fed funds futures currently imply about a 60% probability of a rate increase at the September meeting, leaving markets bracing for further volatility as investors weigh corporate earnings against geopolitical risk and monetary policy uncertainty.mezha