AI rally faces reality check as Asian stocks slip before Samsung earnings

Asian markets started the week with a more careful tone as investors moved from macro relief to earnings scrutiny.

Lower oil prices have eased one of the biggest inflation worries, while softer US payrolls have reduced the pressure for an immediate Federal Reserve rate hike.

That should normally help risk assets. Instead, traders are asking a harder question: whether the AI boom can still justify the scale of gains already priced into chip-heavy markets.

With Samsung due to offer an early read on memory demand, the next test for Asia may come from profits rather than policy.

AI earnings become the next market test

MSCI’s broadest index of Asia-Pacific shares outside Japan edged down 0.2% on Monday.

South Korea’s Kospi fell 1.2%, cooling after a spectacular run driven by AI demand and tight chip supply.

Japan’s Nikkei lost 1.4%, while Chinese blue chips were little changed.

The caution comes before Samsung Electronics reports preliminary second-quarter earnings on Tuesday.

Analysts expect the world’s largest memory-chip maker by sales to post operating profit of 86 trillion won, an 18-fold jump from a year earlier, helped by surging DRAM and NAND prices.

That makes Samsung more than a company event. It is a market signal. A strong print would support the view that AI infrastructure spending is still feeding through to Asian exporters.

Any disappointment could raise questions about whether the chip rally has run ahead of fundamentals.

Oil drop changes the inflation debate

Energy markets offered some relief. Brent crude slipped 0.5% to $71.79 a barrel, near four-month lows, while US crude fell 0.3% to $68.47.

The move followed OPEC+’s decision to lift August output targets by 188000 barrels per day, extending similar increases agreed for June and July.

Shipping through the Strait of Hormuz has also continued, easing fears of an immediate supply shock.

With crude retreating from war-risk levels, investors are reassessing the inflation threat that had pushed some Fed officials towards a more hawkish stance.

ANZ strategists see little risk of a Fed move this month, though they still warn that inflation has stayed above target long enough to keep policymakers impatient.

Fed and data still matter

Fed minutes due Wednesday should give investors more detail on the recent hawkish shift inside the central bank, even if that discussion came before the latest drop in oil.

Markets now imply a 78% chance the Fed leaves rates unchanged at its July 29 meeting.

The week’s data flow starts with the US ISM services survey, while Delta Air Lines and PepsiCo offer early earnings signals before the broader reporting season.

The dollar steadied near 100.88, while dollar-yen hovered around 161.79, close enough to recent 40-year peaks to keep intervention risk alive.