Tech back in fashion as Asian markets extend rebound

Asian equities extended their rebound on Wednesday (Aug 5), following a record on Wall Street and bolstered by confidence stemming from the Trump administration's claim of an imminent deal to reopen the Strait of Hormuz. After a month-long sell-off due to concerns about the AI-led rally, investors resumed pouring money into the sector, extending gains that began on a stunning Friday.

Strong earnings and upbeat forecasts from tech giants like Amazon, Microsoft, and Palantir reignited interest in the industry, helping to quell worries over excessive AI spending and its future impact.

The S&P 500 and Dow reached record highs on Tuesday, while Paris, Milan, Frankfurt, and Madrid saw new peaks as well. Tech firms in Seoul, Tokyo, and Taipei also experienced gains, while Hong Kong, Shanghai, Sydney, Wellington, Mumbai, and Jakarta followed suit. London, Paris, and Frankfurt also opened higher, providing relief to traders after a wave of tech selling linked to worries about higher US interest rates.

The decline in crude oil prices further assisted the market's optimism, with the price of crude tumbling over 5% on Tuesday and down more than 10% over the week. This drop was due to US Treasury Secretary Scott Bessent's optimism about an imminent deal with Tehran on reopening the Strait of Hormuz, a critical issue in ceasefire talks.

President Trump had warned Iran would face harsh consequences unless the waterway was reopened soon. The KOSPI surged nearly 18%, while SK Hynix and Samsung rose 30%, driven by bargain-buying and positive earnings. Positive expectations surrounding the US-Iran truce and the potential resolution of the Strait of Hormuz issue have contributed to the recent optimism, easing concerns about inflation and central bank rate hikes.