Stocks ease despite upbeat Samsung forecast, yen languishes

By Satoshi Sugiyama

TOKYO, July 7 (Reuters) - Asian stocks drifted lower on Tuesday, even after South Korea's Samsung Electronics forecast an eye-popping 19-fold jump in second-quarter profit, while the Japanese yen remained pinned near 40-year lows amid intervention speculation.

Samsung Electronics, the world's largest memory chipmaker, estimated April-June operating profit at 89.4 trillion won ($58.44 billion), a third straight quarter of record operating profit.

South Korean shares slumped 4.1%,

while MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.73%. Japan's Nikkei shed 1.08%.

The sharp rally in AI-related shares has likely been driven by concerns over the economy and inflation, with worries about the outlook — including worsening tensions involving Iran — prompting investors to seek refuge in the sector, said Toru Suehiro, chief economist at Daiwa Securities.

"While it would be healthier for share prices to move in line with the economy and the real economy, those conditions do not change that rapidly," Suehiro said in a note, adding that markets were therefore likely to remain range-bound.

All three major U.S. stock indexes ended higher on Wall Street overnight, buoyed by hopes that artificial intelligence will fuel a strong second-quarter earnings season. The Dow Jones Industrial Average .DJI ended the day up 0.29%, while the S&P 500 .SPX jumped 0.72% and the Nasdaq Composite .IXIC climbed 1.12%.

South Korean chipmaker SK Hynix <000660.KS> launched on Monday a U.S. share sale to raise 43 trillion won ($28.07 billion) and drew indications of interest for up to $7 billion from major investors. Broadcom announced it had expanded its partnership with Apple to develop and supply custom chips through 2031.

INTERVENTION ON THE HORIZON?

In currency markets, the yen languished near 40-year lows on Tuesday as traders grew emboldened to push the currency lower with no sign yet of intervention by Japanese authorities, though the risk of a surprise yen-buying move by Tokyo kept losses in check.

The yen struggled on the weaker side of 162 per dollar in early Asia trade and weakened to nearly its lowest against the British pound since 2007 at 217.09 , having slid to a new low overnight.

Japan is scheduled to hold an auction of 30-year government bonds on Tuesday. If the auction is weak, government bond yields could rise further and accelerate selling of the yen, said Akihiko Yokoo, senior analyst at MUFG Bank.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.03% to 100.89, with the euro down 0.01% at $1.1439.

Oil edged higher, but gains were limited as traders turned their attention to supply increases and demand prospects after prices hit pre-Iran war levels on Monday.

U.S. crude rose 0.54% to $68.92 a barrel and Brent rose to $72.34 per barrel, up 0.49% on the day.

President Donald Trump said on Monday the United States would either reach a deal with Iran or "finish the job," renewing his threat of military action as Tehran projects defiance following the funeral of former Supreme Leader Ayatollah Ali Khamenei.

Trump will attend a NATO meeting in Turkey this week, and Fed watchers will get another glimpse into how new Chair Kevin Warsh steers the central bank when it releases Federal Open Market Committee minutes on Wednesday, the first of his tenure.

The yield on benchmark U.S. 10-year notes rose 0.42 basis point to 4.483%, from 4.479% late on Monday.

In commodity markets, gold lost 0.49% to $4,143.59 an ounce. Silver fell almost 1% to $61.47 an ounce and copper edged 0.21% lower to $13,375.00 a ton.

(Reporting by Satoshi Sugiyama; Editing by Jacqueline Wong)