Asian equity markets moved higher on Wednesday, driven by strength in technology-related names and sustained optimism around artificial intelligence, even as fresh airstrikes between the United States and Iran pushed oil prices up.
Japan led the region, with the Nikkei 225 jumping nearly 3% to reach a record 68,645.5 points and the TOPIX peaking at 3,996.22 points. Market participants attributed the rally to gains in domestic technology and industrial shares, alongside investor expectations of more fiscal support from Tokyo.
Japan’s cabinet approved a draft supplementary budget of 3.11 trillion yen, roughly $19.5 billion, aimed at addressing high living costs linked to the Iran conflict. The measures are intended principally to continue subsidies on gas and electricity prices. The government, led by Prime Minister Sanae Takaichi, is seeking parliamentary approval for the package by Friday, and Takaichi was also set to make a decision on a possible consumption tax cut this month.
Investors said the fiscal measures, combined with ongoing enthusiasm for AI and semiconductor-related stocks, helped lift Japanese markets. Technology and chip names were cited as the main drivers of the advance.
Regional markets took a constructive cue from Wall Street, where U.S. indexes eked out record highs overnight as technology and chipmaking stocks remained strong. S&P 500 futures were steady in Asian trading hours.
Markets appeared to look past a fresh round of airstrikes between the U.S. and Iran late on Tuesday, despite a related jump in oil prices. Reports earlier in the week suggested peace negotiations had faltered after Iran withdrew from indirect communication with the United States, and those developments weighed on sentiment even as equities broadly held on to gains.
Australia’s S&P/ASX 200 climbed 0.8% after first-quarter gross domestic product came in slightly weaker than expected. The GDP release showed some resilience in household spending, but higher fuel costs and weather-related disruptions in mining activity weighed on growth in the quarter. The softer print strengthened views that the Reserve Bank of Australia is likely to keep interest rates on hold in coming months, following cumulative rate increases of 75 basis points earlier this year.
Across the region, China’s Shanghai Shenzhen CSI 300 advanced 1.6%, while the Shanghai Composite rose 0.6%. Singapore’s Straits Times increased 0.7%.
Hong Kong’s Hang Seng lagged, sliding nearly 2% after a strong prior-session performance, with investors reportedly locking in profits among local technology heavyweights that had recorded significant gains the previous day.
Indian equities underperformed at the open, with the Nifty 50 down around 0.7%. Market participants cited concerns over elevated oil prices and the market’s lack of exposure to the AI-related rally as factors pushing the Nifty toward a two-month low this week.
Market context and sector impacts
- Technology and semiconductor stocks were primary contributors to gains in Japan and provided positive momentum across the region.
- Energy-related price moves, including the rise in oil following U.S.-Iran strikes, added volatility and influenced markets sensitive to fuel costs and inflation.
- Domestic fiscal policy decisions in Japan and the prospect of continued subsidies for household utilities supported local consumer-facing sectors and broader equity sentiment.
Near-term considerations for investors
- Geopolitical developments involving the U.S. and Iran and the resulting pressure on oil prices remain a key uncertainty for markets and energy-sensitive economies.
- Monetary policy expectations have been influenced by domestic economic data, as seen in Australia where softer GDP tempered bets on further rate hikes.
- Profit-taking dynamics can lead to short-term reversals in markets that have posted strong recent gains, illustrated by the pullback in Hong Kong equities.