South Korean shares were poised to end a seven-week losing streak on Friday, with the Kospi climbing 0.82% to 6,868.89, marking a three-week high as chipmakers rallied on AI-driven optimism. According to Reuters, the tech-heavy index gained 55.55 points after rising as much as 2.9% earlier in the session, though it pared some gains as investors turned cautious ahead of a public holiday on Monday. The index marked its fifth consecutive session of gains, rising 9.4% during the period after losing nearly 31% over the previous seven weeks. Market volatility has also eased significantly, with the volatility index at 56 on Friday, down sharply from a record high of 98 in late June.
Asian stock markets delivered strong gains on Friday, with Japan's Nikkei 225 jumping 1.73% and South Korea's Kospi advancing 2.11%, while Australia's S&P/ASX 200 fell 0.81%. According to NDTV Profit, the gains in Japan and South Korea come after a strong performance in the previous session, with Japan's Nikkei 225, Taiwan's benchmark and South Korea's Kospi rising 1.16%, 1.11% and 3.56% respectively. The broader Topix in Japan gained 0.92%, while South Korea's small-cap Kosdaq added 0.84%. New Zealand's NZX 50 gained 0.64%, and Singapore's STI was nearly flat, easing just 0.01%.
Strength in technology and artificial intelligence-related stocks remained a key driver of the rally across Japan, Taiwan and South Korea, with SK Hynix gaining 3.01% and Hyundai Motor rising 5.73% among major performers. According to Reuters, the broader improvement in sentiment comes as investors weigh easing inflation pressures in the United States against the prospect of continued gains in technology and AI-related stocks. Samsung Electronics slipped 0.37% after rising more than 2% earlier in the session, while LG Energy Solution declined 1.37%. The technology sector's continued outperformance reflects growing investor confidence in AI-driven innovation and digital transformation across Asian markets.
Foreign investors were net buyers of South Korean shares worth 780.2 billion won ($550.81 million), supporting the market recovery. According to Reuters, the gains were also supported by softer-than-expected U.S. producer inflation reading that strengthened expectations that the Federal Reserve will leave interest rates unchanged at its September meeting. Auto stocks were among the stronger performers, with Kia Corp gaining 1.97% and POSCO Holdings advancing 1.08%. The South Korean won strengthened 0.16% to 1,416.3 per dollar from its previous close of 1,418.6. In the bond market, September futures on three-year Treasury bonds gained 0.04 point to 103.33, while the benchmark 10-year yield declined 1.1 basis points to 4.282%.
The oil market is closely watching diplomatic efforts that could facilitate the resumption of energy shipments through the Strait of Hormuz, a critical route for global oil shipments. Pakistan's defence minister said the US and Iran were close to reaching "some sort of arrangement" concerning the waterway, according to Bloomberg. Separately, talks between Iran and Oman over shipping through the Strait of Hormuz have advanced, as reported by Al Jazeera, citing a spokesperson for Qatar's Foreign Ministry. Any sustained increase in vessel traffic through the waterway could ease concerns over supply disruptions and put pressure on crude prices, making any progress towards restoring normal traffic an important factor for markets.
