Asian equities surged on Friday as investors focused on AI investment opportunities while brushing off concerns over escalating US-Iran tensions. South Korea's KOSPI gained 2.4% in early trading, with Japan's Nikkei 225 rising 1.8%, while the broader MSCI Asia-Pacific index outside Japan climbed 0.76%. Chip bellwethers SK Hynix and Samsung both gained 3%, driving the regional rally as investors looked past the renewed back-and-forth attacks that have further eroded the fragile three-week-old ceasefire. Taiwan markets were closed during the session, leaving the focus on the mainland markets. As reported by Business Standard, Nick Twidale, chief market strategist at ATFX Global, noted that investors seem incredibly resilient to Middle East risks, with tech stocks again driving markets higher despite the escalating geopolitical tensions.
Brent crude futures were set for a 5% rise in the week, marking their strongest weekly performance since early May as investors assessed the impact of ongoing supply disruptions through the critical Strait of Hormuz. Brent crude traded at $76.03 per barrel, having given up most of the gains it picked up when the conflict began at the end of February. The US also said talks with Iran would continue despite the recent strikes, helping to soothe some of the earlier panic. Treasuries gained Thursday, sending 10-year yields down three basis points to 4.55%, reflecting the market's reassessment of geopolitical risks. The renewed oil-driven inflation impulse has deepened the global bond rout, with the 10-year Japanese government bond yield rising to 2.880%, its highest level since September 1996. Australia's 10-year yield has climbed to 4.924%, and the 10-year US Treasury yield has added another 2 basis points to 4.586% in Asian trade. In commodities, gold looked set to clock a 1% decline for the week and was last at $4,113 per ounce in early trading.
Japanese technology stocks were the key drivers of the regional rally, with strong gains recorded across major semiconductor and technology companies. SoftBank Group, Murata Manufacturing, Tokyo Electron, Advantest and Ibiden all posted significant gains, benefiting from renewed optimism around AI investments. The broader semiconductor segment benefited from the Philadelphia SE Semiconductor index rising 3% overnight, with investors looking past the renewed geopolitical tensions. Sam Konrad, investment manager for Asia Equity Income at Jupiter Asset Management, noted that the listing could help re-rate Korean-listed SK Hynix shares, potentially supporting Samsung Electronics too when they release shareholder return plans. Investors are likely to monitor inflation trends, currency movements and corporate earnings guidance for further market direction, while technology and semiconductor stocks are expected to remain key drivers of near-term performance.
SK Hynix's Korean shares have surged an eye-popping 238% this year, taking the broader benchmark to record highs and making the KOSPI the world's best-performing major stock market since the start of 2025. The AI mania has also spurred sharp swings in recent weeks as investors fret about sky-high valuations and worry about the sustainability of their massive profit growth. In currency markets, the Japanese yen hung around its lowest level in 40 years as traders kept a watch for official intervention from Tokyo, with it last fetching 162.18 per U.S. dollar, not far from the 1986 low of 162.84 it hit last week. The dollar otherwise was mostly muted as investors awaited catalysts to gauge the path of U.S. interest rates, with traders pricing in 34 basis points of hikes for the year but that may change depending on inflation pressure from the war.
