Asian equity markets showed a split performance on Wednesday as a technology-driven advance pushed Japan and South Korea to new record levels, even as wider investor appetite was constrained by geopolitical uncertainty surrounding Iran and mixed regional economic signals.
Wall Street momentum carried into Asian trading - the S&P 500 and the NASDAQ Composite closed at all-time highs overnight, and U.S. stock index futures traded marginally higher during Asian hours - underpinning confidence in tech names that are benefiting from renewed interest in artificial intelligence-related spending.
Tech rally lifts Tokyo and Seoul
Japan's benchmark Nikkei 225 rose as much as 2.2% to a new record high of 66,428.81 points, while the broader TOPIX index remained flat. In South Korea, the KOSPI surged 5% to a fresh record of 8,457.9 points as AI-linked enthusiasm accelerated gains among chipmakers.
SK Hynix (KS:000660) advanced nearly 14%, a move that pushed the company's market capitalisation above $1 trillion for the first time and added it to a group of memory and semiconductor peers that now include Samsung Electronics (KS:005930) and Micron Technology (NASDAQ:MU) in the trillion-dollar market value bracket. Samsung Electronics shares also reached a record high, climbing as much as 8% after unionised workers approved a wage and bonus agreement that averted a potentially disruptive strike.
Regional technology stocks broadly benefited from optimism about AI-related spending, a dynamic reinforced by Micron Technology's sharp rally on Wall Street following a bullish brokerage upgrade. That momentum in semiconductor equities was the principal driver behind the headline record moves in Tokyo and Seoul.
Wider regional picture: mixed results
Despite the tech-led strength, other major Asian bourses lagged. China's Shanghai Composite fell 1.1%, and the blue-chip CSI 300 index eased 0.7%. Hong Kong's Hang Seng slipped 0.8% despite advances in chipmaking stocks. India's Nifty 50 inched up 0.1%. Singapore's markets were closed for a public holiday.
Oil markets remained volatile. Brent crude hovered near $99 per barrel amid ongoing supply disruptions through the Strait of Hormuz, a factor contributing to the cautious tone among investors who worry about the economic implications of higher energy costs.
Geopolitical risk caps gains
Even as chipmakers and technology shares rallied, gains were constrained by the prospect that renewed U.S. military strikes on Iranian targets could upend diplomacy intended to end the Middle East conflict. That uncertainty left many investors reluctant to fully embrace the rally, keeping overall regional sentiment guarded.
Policy and data in focus
In Australasia, Australia's S&P/ASX 200 edged up 0.2% after data showed underlying consumer prices rose 3.4% year-on-year in April, up from 3.3% in March. The uptick reinforced expectations that the Reserve Bank of Australia may keep interest rates elevated for longer.
The Reserve Bank of New Zealand left its official cash rate unchanged at 2.25% but signalled that sooner and larger rate rises than previously expected may be required, citing mounting inflation pressures linked to higher energy costs. The RBNZ warned that inflation could peak at 4.3% later in the year as the Middle East conflict pushes up fuel and petrochemical prices, even as growth weakens. New Zealand's NZX 50 rose 0.9%.
Near-term outlook
Investors were left awaiting further developments in Middle East diplomacy and a U.S. inflation report due on Thursday. Those events, combined with ongoing volatility in oil markets and central bank guidance, are likely to influence whether the technology-led advance broadens into a more sustainable regional rally or remains concentrated in chipmakers and select tech names.
Market snapshots cited in this report include the Nikkei 225, TOPIX, KOSPI, Shanghai Composite, CSI 300, Hang Seng, Nifty 50, S&P/ASX 200 and NZX 50, and the prices and moves referenced relate to the trading sessions described.