Asian stocks mixed as yen jumps against dollar, while oil prices fall

Asian stocks experienced a mixed performance on Monday as the value of the Japanese yen surged against the US dollar. The yen climbed to its highest level since late last year following announcements from both the US and Japan that they had taken steps to stabilize the currency. Meanwhile, oil prices dropped significantly after US President Donald Trump indicated that he would order US forces to refrain from attacking Iran, stating that a deal to end the conflict in the Middle East was nearing completion. The dollar experienced a sharp decline, reaching as low as 155.20 against the yen.

The weakening yen proved beneficial for Japanese companies with significant international operations, as it boosted their profits and increased their value in yen terms. Additionally, the cheaper currency attracted foreign tourists who enjoyed their enhanced purchasing power in Japan. However, a depreciating currency weakened Japan's overall purchasing power, leading to higher costs for importing essential goods such as oil and other necessities needed to sustain the economy.

In share trading, Japan's Nikkei 225 index fell by 1.9 per cent to 63,140.68 early Monday, while South Korea's Kospi index dropped by 4.5 per cent to 6,298.75. The Kospi had previously surged by 17.9 per cent on Friday, marking its best day ever, driven by the strong performance of Samsung Electronics and SK Hynix, both of which saw their shares increase by more than 25 per cent on Friday. However, by early Monday, Samsung's stock had declined by 8 per cent, and SK Hynix had fallen by 7.8 per cent.

Hong Kong's Hang Seng index managed to gain 0.6 per cent to 26,038.92, while the Shanghai Composite index declined by 0.5 per cent to 3,812.97. In Australia, the S&P/ASX 200 index slipped by 0.2 per cent to 8,961.30. The temporary cessation of hostilities in the Middle East contributed to the decline in oil prices, with early Monday news indicating a 5 per cent drop in US benchmark crude prices to 80.58 per barrel.

Brent crude, the international benchmark, also experienced a similar decline of 5 per cent to USD 83.87 per barrel. On Friday, US stock markets witnessed significant fluctuations, with the S&P 500 gaining 0.7 per cent and the Dow Jones Industrial Average adding 0.5 per cent. The Nasdaq composite index rose by 1 per cent after briefly reversing an early 1.3 per cent increase.

The US stock market had experienced a rollercoaster ride throughout July, with the S&P 500 achieving its first winning week in three months. Amazon led the market that day, soaring by 15.3 per cent after reporting stronger-than-expected profits for the latest quarter. The company's profit nearly tripled compared to the previous year, largely due to an acceleration in growth within its cloud computing business.

Analysts speculated that Amazon's substantial AI investments were yielding positive results, leading to an increase in its forecast for AI-related expenditures. Similarly, Microsoft experienced a similar surge in its stock price a day earlier, following reports that its AI investments may be translating into higher profits. Chip manufacturers, which supply processors and computer memory to these AI-driven enterprises, also saw considerable fluctuations.

For instance, Micron Technology experienced a rollercoaster ride, initially rising by 6.4 per cent before plunging by 6.5 per cent, eventually ending with a loss of 5.9 per cent. Apple, on the other hand, saw a decline of 7.4 per cent despite reporting stronger-than-expected profits for the latest quarter. The company's forecast for revenue growth in the current quarter fell short of expectations, which executives attributed to a supply crunch in components being consumed by the AI boom.