Nikkei and KOSPI climb as AI shares rebound

The recovery indicates that market participants view last week's AI decline as a positioning adjustment rather than a cyclical shift. This aligns with the morning assessment from wealth managers and China's robust AI-related export figures. The market's resilience in the face of Nvidia's drop suggests it considers that problem specific to the company for now. Falling crude prices provide another positive factor, particularly for energy-importing nations like South Korea and Japan, although Brent around $92 keeps energy costs elevated. The Nikkei's reluctance to move above 61,000 indicates the rally may require fresh drivers, with U.S. consumer price data due later today as the next challenge for technology sentiment.

Asia's AI-related trades have recovered from Friday's shock and even Nvidia's setback, yet the Nikkei's difficulty surpassing 61,000 indicates that confidence is not entirely restored.

Here are the key figures from the session:

• The Nikkei added approximately 2.7% to trade near 60,400, and the Topix gained about 2.2%, recovering most of the roughly 6% decline from Friday over two trading sessions.
• The KOSPI surged more than 4% to around 5,240, driven by Samsung Electronics and SK Hynix.
• SoftBank climbed more than 14%, and Advantest, Tokyo Electron, and Kioxia also posted sharp gains.
• The rise occurred despite Nvidia's 4.2% decline overnight, which analysts view as company-specific.
• Falling oil prices, due to expectations of an end to the US-Iran conflict, boosted Korean airlines and buoyed overall market sentiment.

Stocks in Japan and South Korea continued their recovery on Tuesday, with AI shares rising once more and regaining a significant portion of the terrain lost during Friday's technology-driven decline.

The Nikkei 225 rose approximately 2.7% to trade near 60,400 during early afternoon trading, and the broader Topix advanced about 2.2%. In Seoul, the KOSPI increased more than 4% to roughly 5,240, while the technology-focused KOSDAQ gained almost 4%.

Semiconductor and artificial intelligence stocks were the leaders. In Tokyo, SoftBank Group advanced more than 14%, chip equipment manufacturers Advantest and Tokyo Electron added approximately 5% to 6%, and memory producer Kioxia rose over 7%. Kioxia had been a major contributor to the Nikkei's climb to an all-time high in June, but has since faced a decline due to waning enthusiasm for AI stocks. In Seoul, Samsung Electronics increased roughly 5% and SK Hynix about 6%.

The advances occurred even as Nvidia dropped 4.2% overnight following controversy around CEO Jensen Huang. A strategist based in Tokyo stated that the market currently views the matter as isolated to Nvidia and not a broader industry issue.

The Nikkei declined almost 6% on Friday over worries that Democratic victories in the U.S. midterm elections might hinder AI spending. Two days of solid advances have now recovered the bulk of those declines, but the same strategist noted that investors were hesitant to drive the index past 61,000.

Falling crude oil prices provided additional support, especially in Seoul. Expectations of a resolution to the US-Iran conflict pushed oil down and alleviated inflation concerns, which helped U.S. markets end higher on Monday. Korean Air and Asiana Airlines each gained over 11%. Brent crude traded around $92 per barrel, while West Texas Intermediate was near $86, both slightly lower for the session.

Other regional markets saw smaller increases. Hong Kong's Hang Seng rose roughly 0.5%, and Shanghai added approximately 0.3%. In Tokyo, Toyota was the largest negative contributor to the Topix. The yen remained nearly flat around 158 to the dollar following the Bank of Japan's Summary of Opinions released earlier in the session.