Asian stocks steady as AI shares rebound from Monday’s selloff

Asian stocks steadied on Tuesday as a rebound in artificial-intelligence-linked shares helped offset Monday's sharp technology selloff, though elevated oil prices and rising bond yields kept investors on guard ahead of central bank decisions in the United States and Japan.

SoftBank Leads Nikkei Recovery

Japan's Nikkei 225 recovered roughly 1% to 64,082.36 by the midday break, led by SoftBank Group, which surged about 9% after plunging 10.7% in the prior session. The broader Topix was flat at 4,057.06, underscoring that the recovery was concentrated in AI-exposed names rather than broad-based.finimize+1

"Japan was the first market that was hit by the warning from the AI leaders in the previous session," said Kazuaki Shimada, chief strategist at IwaiCosmo Securities. "The morning after, investors thought it was too early to judge the fate of the pace of AI investments by hyperscalers."thestar

Memory-chip maker Kioxia rose 2.73%, while Advantest and Tokyo Electron gained 0.8% and 0.33%, respectively. Bank stocks lagged, with Mitsubishi UFJ Financial Group ↘ 0.23% down 0.83% and Sumitomo Mitsui Financial Group ↗ 0.16% losing 1.98%.finimize+1

Oil and Bond Yields Add Caution

Across the region, the MSCI Asia Pacific index outside Japan dipped 0.12%, while South Korea's Kospi fell 0.25% and Hong Kong's Hang Seng dropped about 0.5%. Brent crude traded above $106 a barrel after Yemen's Iran-aligned Houthis launched a new attack on Saudi Arabia and Riyadh blamed Iran-backed fighters in Iraq for a pipeline strike it said could disrupt as much as 4% of global oil supply.investing+1

Benchmark 10-year U.S. Treasury yields touched 5% overnight for the first time since 2023, while Japan's 10-year government bond yield returned to 3%. "Markets are likely to remain focused on the risk that higher crude oil prices could add to inflationary pressures and, in turn, push interest rates higher," said Yokoo Akihiko, analyst at Mitsubishi UFJ Bank.globalbankingandfinance

Central Bank Decisions Loom

The Federal Open Market Committee begins a two-day meeting on Tuesday, with markets pricing in a more than 90% chance of a rate hike — what would be the Fed's first increase since mid-2023. Analysts at Morgan Stanley ↗ 0.25% said they expect a 25-basis-point hike on Wednesday, citing "second-round effects from energy prices, strong demand tied to AI-related investment" and concerns about credibility as reasons the balance of risks now favors tighter policy.investing+1

The Bank of Japan is widely expected to raise its policy rate by 25 basis points to 1.25% at the conclusion of its own two-day meeting on Friday, as policymakers seek to shore up the yen after intervention helped steer the currency away from a 40-year low. A policy announcement from the Bank of England is also due later in the week.globalbankingandfinance+1