Asian Markets Rally as AI Sentiment Recovers

The broader MSCI Asia-Pacific index outside Japan climbed 5%, while the Nikkei 225 advanced over 3%. This shift follows robust earnings reports from Microsoft and Amazon, which successfully tempered fears that the massive capital expenditures directed toward AI infrastructure were yielding diminishing returns. Fabien Yip, a market analyst at IG, noted that the recent market turbulence likely represented an overreaction, as underlying demand for AI technology remains sustainable.

Despite the session's gains, South Korean markets remain bruised, with the KOSPI tracking a 25% decline for July—its worst monthly performance since 1997. Authorities in Seoul have moved to restrict leveraged products that amplified the recent market instability. Meanwhile, the Bank of Japan maintained current interest rates, keeping the yen in focus as traders await Governor Kazuo Ueda’s press conference. The currency traded near 160.66 per dollar, following suspected coordinated foreign exchange interventions in New York on Thursday aimed at curbing extreme volatility. In the energy sector, oil prices retreated despite rising tensions in the Middle East, with Brent crude dipping to $88.16 a barrel as the market showed surprising resilience to regional geopolitical friction.