Asia report: Markets bounce back from AI-led rout

(Sharecast News) - Asia-Pacific equities rebounded on Monday, recovering from last week's sharp sell-off driven by concerns over-inflated artificial intelligence valuations. Investors welcomed signs of stabilisation across major markets, with South Korea leading gains and upbeat Chinese inflation data offering further support to sentiment.

Patrick Munnelly, market strategy partner at TickMill, said the rebound reflected a broad return of risk appetite after "hopes for a resolution to the longest US government shutdown lifted market sentiment following a rollercoaster week marked by concerns over inflated artificial intelligence valuations."

He added that "technology stocks spearheaded the recovery in Asia, with chipmakers like Taiwan Semiconductor Manufacturing and SK Hynix among the standout performers."

Markets in the green across the Asia-Pacific region

In Japan, the Nikkei 225 rose 1.26% to 50,911.76 and the broader Topix gained 0.56% to 3,317.42, buoyed by strong advances in tech and manufacturing shares.

Mercari surged 18.17%, Olympus Corporation climbed 11.54% and Denka Co gained 7.48%.

Minutes from the Bank of Japan's October meeting suggested policymakers were leaning closer to a rate hike, noting that conditions for further policy normalisation had "almost been met," though they cautioned that more evidence was needed to confirm whether inflation had become "entrenched."

China's markets also strengthened as investors digested weekend data showing consumer prices rose 0.2% year on year in October, beating expectations for flat growth, while producer prices fell a softer-than-expected 2.1%.

The Shanghai Composite advanced 0.53% to 4,018.60, supported by double-digit gains in HNA Technology, Citychamp Dartong and Chongqing Construction Engineering Group, each rising more than 10%.

The Shenzhen Component added 0.18% to 13,427.61.

Hong Kong's Hang Seng Index gained 1.55% to 26,649.06, lifted by strength in Pop Mart International Group, up 8.11%, CNOOC, which rose 5.95%, and China Resources Mixc Lifestyle, up 4.98%.

South Korea's Kospi led regional advances, jumping 3.02% to 4,073.24 amid strong performances from banks and insurers.

Kolon Mobility Group surged 30%, Lotte Energy Materials climbed 29.82% and Sam Young Chem advanced 22.03%.

Munnelly said the "MSCI Asia Pacific Index climbed, with gainers outnumbering losers by more than two to one," underscoring the breadth of the recovery after last week's AI-led rout.

Australia's S&P/ASX 200 gained 0.75% to 8,835.90, underpinned by resource stocks.

Liontown Resources jumped 12.75%, Monadelphous Group rose 11.01% and Pilbara Minerals added 9.22%.

In New Zealand, the S&P/NZX 50 edged up 0.13% to 13,617.48, with ANZ Group Holdings up 3.08%, Sanford rising 2.48% and A2 Milk Company advancing 2.04%.

Munnelly noted that US and European equity futures also advanced "after the Senate made progress on a critical procedural step toward reopening the government," adding that a resolution would "restore access to crucial economic data, including employment and inflation figures, giving investors a clearer lens into the Federal Reserve's policy outlook."

Regional currencies mixed as oil prices rise

In currency markets, the dollar strengthened 0.53% against the yen to JPY 154.23, but fell 0.6% against the Aussie to AUD 1.5310 and 0.32% on the Kiwi to NZD 1.7729.

On the energy front, Brent crude futures were last up 0.22% on ICE at $63.77 per barrel, while the NYMEX quote for West Texas Intermediate gained 0.25% to $59.90.

Reporting by Josh White for Sharecast.com.