Asian stocks climbed on Thursday, fueled by an AI-driven surge in China and major dealmaking in Japan’s technology sector. This offset concerns over rising U.S. inflation and higher interest rates.
Technology stocks led the rally as optimism around AI’s long-term impact persisted. China's Shanghai Shenzhen CSI 300 and Shanghai Composite rose, while Hong Kong’s Hang Seng jumped 1.1% to a four-month high. Since mid-January, Chinese markets have surged 5%-15%, primarily driven by enthusiasm over AI advancements, particularly following the release of DeepSeek R1.
Despite this, broader Chinese market sentiment remained cautious due to escalating trade tensions. U.S. President Donald Trump recently imposed 10% tariffs on Chinese imports, prompting retaliation from Beijing.
Japan’s Nikkei 225 gained 1.2%, with the TOPIX index up 0.9%. A weaker yen boosted export-driven stocks, while cybersecurity firm Trend Micro soared over 16% amid reports of a bidding war involving Bain Capital, Advent International, and EQT.
Across Asia, South Korea’s KOSPI climbed 0.9%, bolstered by chipmakers benefiting from China’s AI growth. Australia’s ASX 200 edged up 0.2%, while Singapore’s Straits Times index slipped 0.2%. India’s Nifty 50 pointed to a slight rebound after six consecutive losses, as U.S. tariff threats pressured sentiment.
Meanwhile, oil prices dropped following reports that former U.S. President Donald Trump discussed a potential peace treaty between Russia and Ukraine.
Despite concerns over persistent U.S. inflation, Asian markets maintained positive momentum, with UBS analysts suggesting China’s AI-fueled rally still has room to grow. Investors, however, remain cautious amid the potential for prolonged high U.S. interest rates and escalating global trade disputes.