TOKYO: Asian stocks mostly rebounded after days of losses on Tuesday (Jul 21), led by technology shares, while oil prices eased slightly even as Iran said it had hit US military targets in Bahrain and Kuwait.Tech stocks have fallen in recent trading sessions on ongoing fears that the artificial intelligence sector may be overbought, with chip shares leading the rout.But on Monday US technology stocks advanced and this was mirrored in Asian trade on Tuesday, helping Japan's Nikkei rise 1.75 per cent and the KOSPI in Seoul 3.6 per cent.Stephen Innes of SPI Asset Management cautioned however that the rebound did not appear to be driven by "a decisive improvement in the AI fundamentals".
"Big Tech earnings now need to prove that AI revenues, margins and cash flow can justify the scale" of the huge investments in AI infrastructure, Innes said.Tesla and Alphabet are due to release results this week, followed by Microsoft, Meta, Apple and Amazon next week.Oil prices had risen Monday after fresh fighting over the weekend in which the United States announced three new US military fatalities and one service member missing in action.Iran's Revolutionary Guards said on Tuesday they hit US military targets including air defence systems in Bahrain and Kuwait, state news agency IRNA reported.Iran's Yemeni allies, the Houthi rebels, also said Monday they would blockade Saudi ports, putting at risk Riyadh's ability to bypass the Strait of Hormuz for some of its oil exports."In practice, we think even if there were disruptions it is unlikely to be sustained given the lack of capability right now by the Houthis to do so and also differentiate which are Saudi linked ships or not," said Michael Wan at MUFG."All-in from a market perspective we think it's still a reasonable base case that there is resolution in the conflict, even if things may get worse before it gets better," Wan said.US President Donald Trump meanwhile signed orders to impose new 50 per cent tariffs on many Canadian goods, claiming "discriminatory treatment" against American alcohol, automobile and dairy products.Yields on British gilts rose on Monday after comments by new Prime Minister Andy Burnham about public finances worried bond investors.In Asia, US Secretary of State Marco Rubio condemned "dangerous and aggressive actions" by China following a clash with the Philippine navy in the South China Sea, as he arrived for an ASEAN foreign ministers' meeting.
