The KOSPI saw gains at the end of Tuesday’s trading session, but it gave up much of the earlier spike that was attributed to advancements in artificial intelligence. In order to prepare Tokyo investors for a potentially tumultuous reopening on Thursday, the Nikkei 225 was closed in observance of Japan’s Silver Week festivities. South Korea’s benchmark concluded approximately 0.5% higher, having surged over 2% shortly after the market opened. Samsung Electronics concluded the trading session with an increase of approximately 0.7%, whereas SK Hynix experienced a reversal from its earlier gains, declining by about 1.5%. The diminishing rally sharply contrasted with the morning session, during which both chipmakers experienced an increase of over 2% following the Nasdaq Composite’s record close.

The KOSPI initially ascended past 7,170 as investors pursued semiconductor stocks following Monday’s 4.3% increase in the Philadelphia Semiconductor Index. Meta’s new Muse AI assistant has sparked renewed enthusiasm for AI infrastructure investment, leading to notable gains for AMD, Intel, and Arm on Wall Street. Declining oil prices and US Treasury yields fostered an initial risk-on sentiment. However, as investors took advantage of the gains, the momentum of the Korean surge decreased. Kiwoom Securities analyst Han Ji-young informed MoneyToday that the interplay of declining oil prices, reduced US yields, and a resurgence of confidence in Meta’s AI ecosystem has established a conducive atmosphere for Korean semiconductor stocks. She also noted that the decline in WTI from above $100 had alleviated one of the most significant macro pressures on equities.

The late reversal in SK Hynix suggests that the initial enthusiasm did not possess the requisite breadth to sustain the opening momentum, even as the KOSPI continued to remain in positive territory for a third consecutive session. Japan’s cash market remains closed through Wednesday, leading to the Nikkei 225 holding steady at Friday’s close of 65,018.95. Tokyo will resume operations on Thursday after a sequence of three consecutive holidays. That indicates the Nikkei has not yet incorporated Monday’s record close on the Nasdaq, Tuesday’s rally in Asian chip stocks, the decline in oil prices, or the developments leading up to Thursday’s meeting between Trump and Xi. The yen is adding an extra dimension of complexity. It depreciated to around 157.5 per dollar on Tuesday, despite the Bank of Japan having raised rates to 1.25% the prior week. Markets reflected discontent stemming from two dissenting votes and the absence of a stronger signal regarding the prospect of another increase.

Senior markets economist James Reilly remarked to the Japan Times that the BOJ has once more been unable to produce lasting yen strength, resulting in the currency becoming more reliant on fluctuations in US rates. Elsewhere, Taiwan’s Taiex concluded the day approximately 0.2% higher after reaching a record during the session, while Hong Kong’s Hang Seng increased by roughly 0.6% and mainland Chinese stocks rose around 0.4%. Brent crude held steady near $101 a barrel after a notable drop from last week’s high of almost $110, while the yield on the US 10-year Treasury fell to approximately 4.95%. Both actions mitigate the pressure on energy-importing Asian economies and expensive technology stocks. Citi Research indicated that positioning remains distinctly bearish in the Nikkei and KOSPI, which could facilitate substantial short-covering rallies if positive catalysts persist.