Asian markets surge as AI chip stocks bounce back

Global equity markets staged a broad recovery on Tuesday as investors returned to beaten-down semiconductor and artificial intelligence-linked stocks after a sharp selloff the previous session, with South Korea's Kospi leading gains across Asia and European indexes opening higher.

Asia Leads the Recovery

South Korea's Kospi surged as much as 4.7% on Tuesday after falling 4.5% a day earlier, according to the Associated Press. Samsung Electronics rose 6.2%, while memory chipmaker SK Hynix gained 4.1%. The index has gained more than 50% so far this year but dropped over 20% in the past month as investors locked in profits amid concerns about a potential bubble in AI investments.chron+1

Tokyo's Nikkei 225 added 3.3% after a holiday on Monday, with chip-related names surging — Kioxia Holdings climbed 17.2%, Advantest jumped 7.7%, and SoftBank Group rose 6%. Taiwan's Taiex gained 4.2%, led by TSMC ↗ 3.51%, which advanced 3.9%. The Shanghai Composite added 1.8%.kiro7

In Europe, Germany's DAX rose 0.3%, France's CAC 40 edged up 0.1%, and Britain's FTSE 100 added 0.2%.kiro7

Earnings Week and Fragile Sentiment

The rebound followed a turbulent stretch for chip stocks. On July 17, global semiconductor shares sold off sharply as investors questioned whether massive AI capital expenditures could justify elevated valuations, with the Nasdaq Composite dropping roughly 1% that day. A new AI model from China's Moonshot that claimed to rival American systems added to the unease.wsj

U.S. futures pointed higher on Tuesday, building on Monday's session in which Nvidia ↘ 4.27% rose 0.2%, Micron Technology ↗ 6.25% gained 1.9%, and Broadcom ↗ 8.78% climbed 2%. AMD Advanced Micro Devices, Inc. ↗ 13.26% added 1.6% after announcing an expanded AI partnership with Microsoft ↗ 2.75%.kiro7

Middle East Tensions Weigh on Oil

Unlike the easing suggested by some analysts, oil prices remained elevated amid an escalating U.S.-Iran conflict. Early Tuesday, Iran attacked another tanker in the Strait of Hormuz while the U.S. conducted a 10th consecutive night of strikes against Iranian targets. Iran's interior minister traveled to Pakistan for mediation talks, though prospects for a new deal remained uncertain.kiro7

"There's some hope of de-escalation between the U.S. and Iran," ING commodities strategists Warren Patterson and Ewa Manthey wrote Tuesday. "This won't be an easy task. Large divisions remain between the U.S. and Iran."kiro7