Could a handful of chipmakers and a surging AI narrative rewrite the end-of-year market tape? On Monday Asian equities marched higher, carried by semiconductor gains and a renewed appetite for technology, even as the Japanese yen came under heavy pressure.
Tokyo led the charge. The Nikkei 225 jumped roughly 1.8% to about 50,402, buoyed by big moves in chip-related names: Tokyo Electron climbed more than 6% and test-equipment specialist Advantest rose about 4.5%. Taiwan’s TSMC added around 2.5%, helping the Taiex and Taiwan tech-heavy benchmarks lift. Across the region Hong Kong’s Hang Seng ticked up, and mainland China’s Shanghai Composite rose as markets digested steady policy signals from Beijing — the People’s Bank of China kept its 1-year and 5-year loan prime rates unchanged.
Why the pop in tech? A late-week rebound on Wall Street, led by AI bellwethers such as Nvidia and Broadcom, spilled into Asian trading. Nvidia’s rally — roughly 3.9% on the session — acted like a wake-up call for traders rotating back into pricey, growth-oriented names. That momentum comes amid a broader wave of investor interest in generative AI and related infrastructure, a trend that’s showing up in venture budgets, corporate product roadmaps and, of course, stock prices. For background on how big tech’s AI bets are shaping markets, see Microsoft’s new image model and Google’s recent AI mode initiatives, which point to why investors keep favoring the sector: Microsoft Unveils MAI-Image-1 and Google’s AI Mode Adds Agentic Booking.
But the story isn’t all smooth sailing. The yen’s fall stood out — a striking counterpoint to conventional expectations after the Bank of Japan’s upward policy drift. Instead of strengthening following the BOJ’s recent rate move, the yen slid further; the dollar changed hands around 157.45 yen, slightly firmer than late Friday. Heavy selling prompted a warning from a top Finance Ministry official, Atsushi Mimura, that authorities would step in if moves became excessive. Traders attributed the currency’s weakness to a mix of profit-taking, dollar demand and technical flows rather than a sudden collapse in Japan’s fundamentals.
Bond markets added another wrinkle. Yields in some pockets crept higher, reflecting shifting rate expectations and portfolio rebalancing into assets perceived to benefit from AI-driven growth — think semiconductors and enterprise software — while sectors tied to consumer cyclicality showed fatigue.
Notably, the U.S. backdrop provided tailwinds and headwinds simultaneously. The S&P 500 had closed the prior week on a gain, and futures opened firmer, yet measures of consumer confidence and housing activity remain subdued. Oracle’s surprise move into a U.S. TikTok joint venture lifted that stock sharply, underscoring how corporate maneuvers and M&A whispers can deliver outsized day-to-day impacts. Meanwhile, homebuilders were hammered after a weak sales report: KB Home plunged by double digits on the news.
Market participants sounded cautiously optimistic. “Asian equity markets are stepping onto the floor with a constructive bias,” Stephen Innes of SPI Asset Management said, noting that traders are banking on a friendly final stretch to the year for equities — but he also flagged the risk that lofty valuations in select tech names could invite sharper volatility should sentiment shift.
Heading into the week, the picture is one of contrasts: upbeat flows into AI and chip stocks, steady Chinese policy settings, and currency strains that could complicate exporters’ calculus in Japan. Investors will be watching whether the tech-led momentum can broaden into other sectors or whether it remains a narrow rally prone to snapbacks.
If you’re tracking sectoral leadership or currency risk, keep an eye on the semiconductor supply chain and central-bank noise — they’re doing much of the heavy lifting for market moves right now.