A stronger US dollar and rising oil prices on Monday could dampen the upward momentum generated by Friday's rebound in Asian stock markets. A risk-off tone is evident in US equity futures ahead of the opening bell, with Nasdaq 100 futures down 0.5%.
The KOSPI is under pressure at the start of the week, having closed lower in five of the past six weeks. While a general risk-on mood on Wall Street Friday saw the S&P 500 Index close higher and the VIX fall to its lowest level since January, some market segments showed weakness. High-beta growth stocks were broadly lower, and declines in Micron's share price offered negative guidance for South Korean memory chip leaders even before a significant jump in crude oil prices.
Markets in Taiwan, China were closed on Friday due to Typhoon Bailu and may see catch-up gains today, aligning with the broader regional rally from last Friday. The focus will be on TSMC's monthly revenue figures, released after Monday's market open, which will provide a timely indicator of the pace of global AI infrastructure build-out ahead of the chipmaker's quarterly earnings report this Thursday. The week also brings several macro-level tests, including US bank earnings and Consumer Price Index data.
A weakening US dollar in the latter part of last week provided support for equities. However, an escalation in geopolitical conflicts could reverse this trend, driving dollar strength, tightening financial conditions, and increasing downside pressure on risk assets. In early Monday trading, precious metals are experiencing a broad and significant sell-off, with gold prices falling below $4,100 per ounce and silver down approximately 2%.
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