Asian markets rallied on Tuesday as mediation efforts regarding the Middle East conflict cooled oil prices, encouraging a rebound in tech-heavy indices. While South Korea’s KOSPI surged 3.6% and Japan’s Nikkei 225 climbed 3%, investors remain cautious as they await key U.S. corporate earnings to determine if the AI-driven market momentum can be sustained.
Regional Market Rebound Following AI Sell-Off
Asian stock markets staged a significant recovery on Tuesday, clawing back losses sustained after recent heavy selling of shares linked to artificial intelligence. In South Korea, the KOSPI index jumped 3.6% to 6,747.95, a sharp reversal from the 4.5% decline recorded just one day prior. According to AP News, the KOSPI remains up more than 50% for the year, despite a 20% pullback over the past month as investors moved to lock in profits amid concerns regarding a potential AI investment bubble. Samsung Electronics surged 6.8%, while memory chip maker SK Hynix gained 4.9%.
Japan’s Nikkei 225 index added 3% to 66,067.91 following a market holiday on Monday, recovering from losses sustained last week. The rebound was bolstered by strong performances in the semiconductor sector: computer memory maker Kioxia Holdings surged 16.1%, while chip testing equipment maker Advantest jumped 7.5%. Other regional tech stocks saw similar gains, with Investing reporting that Samsung Electronics shares rose over 6% and SK Hynix climbed 4.5%. Additionally, OpenAI investor SoftBank Group climbed 5.4%, while chip equipment maker Tokyo Electron added 2.1%.
Elsewhere, Taiwan’s Taiex rose 4.2%, with TSMC advancing 3.9%. Hong Kong’s Hang Seng edged less than 0.1% higher to 25,151.15, while the Shanghai Composite index added 1.4% to 3,850.92. Australia’s S&P/ASX 200 climbed less than 0.1% to 8,793.30, while India’s Sensex gave up 0.4%.
Geopolitical Tensions and the Energy Market
The rally in equities was supported by a slight cooling in oil prices, which had spiked following intensified conflict in the Middle East. Brent crude fell 1% to $88.33 per barrel, and U.S. crude lost 0.6% to settle at $81.97. Despite the dip, prices remain well above the approximately $72-per-barrel level recorded before the conflict began in late February.
The market remains sensitive to ongoing volatility in the region. AP News reported that Iran attacked a tanker in the Strait of Hormuz, and the U.S. has conducted strikes targeting Iran for a 10th straight night. Iran has been retaliating by targeting U.S. allies across the Middle East. Furthermore, Yemen’s Iran-aligned Houthis announced they would impose a naval blockade on Saudi Arabia, raising the prospect of further disruptions to regional energy shipments. While Iran’s interior minister has traveled to Pakistan for mediation talks, the path to stability remains uncertain.
“There’s some hope of de-escalation between the U.S. and Iran,”
Warren Patterson and Ewa Manthey, ING commodities strategists
“This won’t be an easy task. Large divisions remain between the U.S. and Iran.”
Warren Patterson and Ewa Manthey, ING commodities strategists
Earnings Season and AI Infrastructure Returns
Investors are now shifting their focus toward the upcoming U.S. earnings season, seeking evidence that massive capital expenditure on artificial intelligence infrastructure is yielding tangible returns. Major technology companies, including Alphabet, Tesla, and Intel Corporation, are scheduled to report their quarterly results this week. These reports are seen as a critical test for the tech sector following recent volatility.
In the previous session on Wall Street, the S&P 500 slipped 0.2% to 7,443.28, the Dow Jones Industrial Average dropped 0.6% to 51,839.26, and the Nasdaq composite dipped less than 0.1% to 25,508.07. Despite the decline, many AI-related stocks showed movement: Nvidia climbed 0.2%, Micron Technology rose 1.9%, Broadcom was up 2%, and AMD added 1.6% following an announced expanded partnership with Microsoft on AI.
While recent results from TSMC and Samsung Electronics were strong, analysts caution that market expectations are currently very high. Investing noted that this leaves little room for disappointment, particularly as investors continue to weigh whether the valuations of global chip stocks are justified by current growth metrics. As of early Tuesday, the U.S. dollar rose to 162.53 Japanese yen, while the euro traded at $1.1421.
Worth a look
