Asia stocks climb as AI optimism fuels chip rally; won at near two-year high

A broad risk-on tone has taken hold across Asian equity markets as renewed enthusiasm for artificial intelligence demand lifts chip-heavy indices in Tokyo and Seoul. The South Korean won's strength alongside the Kospi's advance signals fresh foreign capital entering Korean assets, a dynamic that often supports a firmer regional backdrop and tends to benefit the Australian dollar, given its sensitivity to Asian growth and commodity demand. The yen has remained largely steady against the dollar on the day, indicating that its recent movement stems more from last week's Bank of Japan repricing than from a new catalyst. Investors continue to monitor crude oil, bond yields and Middle Eastern developments as factors that could swiftly reverse the current risk appetite.

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Chip-related stocks are leading a broad rally across Asian markets, while the won has strengthened to its highest level in almost two years amid growing optimism around AI.

Summary:

• Japanese equities advanced in early trading, buoyed by ongoing hopes for AI-linked demand and indicators of US economic resilience, with semiconductor-linked names outperforming
• SoftBank Group added around 6%, Tokyo Electron rose roughly 4.5% and Lasertec gained about 7%
• The Nikkei Stock Average climbed approximately 1.8% to trade near 66,150
• The dollar remained little changed versus the yen, at around 156
• South Korea's Kospi surged roughly 3%
• South Korea's won firmed to its strongest level against the dollar since October 2024

Japanese shares gained in early trade, with persistent expectations for artificial intelligence-related demand and evidence of US economic strength providing support. Chip-linked names led the advance: SoftBank Group rose around 6%, Tokyo Electron added roughly 4.5% and Lasertec climbed approximately 7%, highlighting how concentrated the rally has been in AI-adjacent semiconductor stocks.

The dollar traded largely unchanged against the yen, holding near 156, suggesting that the yen's recent strength has stabilised somewhat after last week's sharp move driven by Bank of Japan rate-hike speculation. The Nikkei Stock Average gained roughly 1.8%, trading near 66,150, tracking the chip-led rally rather than any fresh domestic catalyst.

The positive tone extended beyond Japan. South Korea's Kospi jumped roughly 3%, while the won firmed to its strongest level against the dollar since October 2024, pointing to renewed foreign appetite for Korean equities and currency exposure alongside the region's chip rally.

Investors continue to watch a handful of swing factors that could quickly alter the mood. Crude oil prices, bond yields and developments in the Middle East remain at the top of the monitoring list, given how sensitive regional risk sentiment has been to any escalation in the ongoing Iran situation or a sharp move in energy markets. For now, AI-driven demand optimism and resilient US data appear to outweigh those risks, though the rally's narrow focus on a small set of chip stocks leaves it vulnerable to a reversal if sentiment shifts on any of those fronts.