Asian Stocks Edge Higher as Tech Rally, U.S.-Iran Talk Progress Support Sentiment

Regional Equities Rise on Tech Strength, Geopolitical Easing

Most Asian stocks traded higher, with sentiment buoyed by a rally in chipmakers and other technology names linked to artificial intelligence. Risk appetite improved after Iranian officials reported some progress in quadrilateral peace talks with the U.S. held in Switzerland on Sunday, easing concerns that had intensified after President Donald Trump threatened renewed attacks on the country. S&P 500 futures pared earlier declines in Asian trading following the comments from Tehran.

Regional markets also drew support from last week’s gains on Wall Street. However, investors remained cautious after the Federal Reserve signaled a more hawkish stance than expected and indicated that U.S. interest rates could stay elevated for longer. Market participants are awaiting comments from several Fed officials and U.S. core PCE inflation data this week for further guidance on the rate outlook.

Japan and South Korea Outperform on AI Optimism

Japan’s Nikkei 225 climbed 2.3% to 72,900 points, while the TOPIX advanced 1.3%, with both indices remaining near record highs. The Nikkei was lifted by strong gains in local technology and chipmaking stocks after the Nikkei newspaper reported that Tokyo is targeting a 10 trillion yen (approximately $65 billion) investment in physical artificial intelligence by 2040. Japanese equities were further supported by a weak yen, which stayed near multi-decade lows despite the Bank of Japan’s 25-basis-point rate increase last week.

South Korea’s KOSPI rose 1.4%, extending recent gains and hovering close to record levels as demand for technology stocks remained solid. SK Hynix Inc surged nearly 6%, overtaking Samsung Electronics Co Ltd to become South Korea’s most valuable company. Investors are also looking ahead to South Korea’s trade data later this week for additional indications of strength in the country’s export sector.

Mixed Performance Across China, Hong Kong, and Australia

In mainland China, the Shanghai Shenzhen CSI 300 gained 0.7%, and the Shanghai Composite added 0.2% as investors awaited further policy support signals from Beijing and monitored upcoming economic releases. Hong Kong’s Hang Seng Index lagged regional peers, falling 0.8%. BYD Co led declines among electric vehicle stocks after reports that the European Union was considering new restrictions on Chinese EVs.

Australia’s ASX 200 slipped 0.1%, underperforming broader regional markets ahead of key inflation and labor market data due later this week. These figures are expected to provide additional clarity on the Reserve Bank of Australia’s policy stance after officials recently indicated continued caution on inflation and the potential for interest rates to remain higher for longer.

Investors are also watching Taiwan’s industrial production data, Singapore’s inflation figures, and U.S. core PCE inflation readings this week for further direction on global markets and interest rate expectations.

FAQ

Which Asian markets performed best on Monday?
Japan and South Korea outperformed, with the Nikkei 225 up 2.3%, the TOPIX up 1.3%, and the KOSPI up 1.4%, all trading near record levels.

What supported the rally in technology stocks?
Technology shares, particularly chipmakers, were supported by optimism around artificial intelligence demand, including a reported 10 trillion yen AI investment target in Japan.

Why did Hong Kong’s Hang Seng Index decline?
The Hang Seng Index fell 0.8%, pressured by losses in electric vehicle stocks such as BYD Co after reports that the European Union was considering fresh restrictions on Chinese EVs.

Which upcoming data are investors monitoring?
Investors are watching U.S. core PCE inflation, comments from Federal Reserve officials, South Korea’s trade data, Taiwan industrial production, Singapore inflation, and Australian inflation and labor market data.