Asian stocks climbed on Tuesday, boosted by gains in technology shares as regional investors followed the strong performance of U.S. tech stocks amid continued optimism over artificial intelligence (AI).
In Japan, equities extended their rally, with major indexes hitting fresh record highs after the election of a fiscally dovish prime minister reduced expectations for more interest rate hikes by the Bank of Japan (BOJ).
However, overall trading volumes in the region were muted due to market holidays in China, Hong Kong, and South Korea.
Asia follows Wall Street tech strength
Regional markets took cues from Wall Street, where the S&P 500 and Nasdaq closed at record highs on Monday, supported by strong gains in chipmakers and AI-linked companies.
In early Asian trading, however, S&P 500 futures slipped 0.1%, signaling a potential cooldown in the rally as traders monitored the U.S. government shutdown. Investors also await speeches from Federal Reserve officials, including Chair Jerome Powell, for further clues on interest rate policy.
Global sentiment remained cautious amid political instability in France, which continued to weigh on risk appetite.
Japan’s Nikkei hits record highs as rate hike bets fade
The Nikkei 225 rose 1% to a record 48,544.0 points, while the TOPIX hit 3,248.39, before both indices eased slightly by 02:12 GMT (22:12 ET).
Industrial and chipmaking stocks led the gains, following the momentum in U.S. peers. Japanese markets rallied strongly on Monday after Sanae Takaichi, a conservative and fiscal dove, was elected leader of the ruling Liberal Democratic Party (LDP) — positioning her to become Japan’s first female prime minister.
A parliamentary session to confirm her appointment is expected in mid-October.
Takaichi’s pro-stimulus stance and opposition to BOJ interest rate hikes lifted market sentiment. Expectations for increased government spending also boosted industrials, particularly those in manufacturing and defense sectors.
However, concerns remain over how Takaichi will finance additional spending, putting pressure on the yen and Japanese government bonds.
AI optimism lifts Asia tech stocks
Asian technology shares were the region’s best performers, mirroring the sharp gains in U.S. chip stocks. AMD (NASDAQ:AMD) surged nearly 24% overnight after announcing a major AI chip deal with OpenAI, sparking hopes that AI-driven demand will continue to power the global semiconductor industry.
Taiwan’s TSMC (TW:2330) rose 2.5%, approaching a record high. In Japan, Advantest Corp (TYO:6857) gained 2.2%, Tokyo Electron (TYO:8035) rose 1%, and Renesas Electronics (TYO:6723) jumped 4.6%.
Elsewhere, Singapore’s STI index gained 0.9%, while Australia’s ASX 200 slipped 0.3%.
ASX Ltd (ASX:ASX) dropped 2% after Cboe Global Markets Inc (NYSE:CBOE) received approval to operate as a new securities listing market, increasing competition in Australia’s exchange sector.
In contrast, South32 Ltd (ASX:S32) outperformed, climbing over 4% after agreeing to sell $17.8 million in shares of Trilogy Metals Inc (TSX:TMQ) to the U.S. Department of War.
India focuses on earnings season
In India, the Nifty 50 index rose 0.4% in morning trade after recently surpassing the 25,000-point milestone. Investors are now turning their attention to the third-quarter earnings season, which kicks off this week.
Major tech firms Tata Consultancy Services (NSE:TCS) and HCL Technologies (NSE:HCLT) are set to report results on Thursday, likely setting the tone for India’s broader market direction.
