Oil prices, which last week fell to pre-war levels, rose on Monday, with West Texas Intermediate adding more than 1 per cent.
Equity markets fluctuated, with Hong Kong, Sydney, Wellington, Taipei and Manila up but Tokyo, Seoul, Shanghai, Singapore and Jakarta down.
Tech firms were again in the spotlight after leading hefty losses last week, with South Korean chip makers SK hynix and Samsung taking the brunt of the selling.
The sector has been hammered by concerns that valuations have gone too far and questions about when firms will see a return on the trillions of dollars pumped into AI.
The tech rally has sent Seoul, Tokyo and Wall Street’s three main indexes to record highs this year, with SK hynix alone soaring 300 per cent in the first six months of the year.Â
The Bank for International Settlements – considered the central bank of central banks – warned on Sunday of a possible bust following a long-running investment boom by companies looking to keep ahead in the AI race.
“Disappointment in returns could trigger a sudden pullback in financing and turn the capex boom into a protracted investment bust, with potential knock-on effects on financial conditions,” it said in its annual report.
It added that “a major equity-market correction could have larger macroeconomic consequences today than in the past”.Â
Investors are looking ahead to the release of US jobs data, which could have a bearing on the Federal Reserve’s monetary policy plans.Â
The bank has taken a more hawkish turn amid concerns over surging inflation that has been caused by the Iran war.
“Last month, the strong data triggered a 4 per cent sell-off on the Nasdaq, its worst single-day decline in over a year, as higher-for-longer fears weighed heavily on the AI trade,” said IG market analyst Fabien Yip.
“A repeat beat on Thursday could trigger a similar rotation; a miss, by contrast, may dampen hike expectations and lift rates-sensitive equities.”
