Asian chip stocks stage dramatic rebound ahead of Nvidia earnings

Asian equity markets staged a dramatic intraday reversal on Tuesday, with Japan's Nikkei 225 and South Korea's KOSPI plunging at the open before recovering to close higher as bargain hunters moved into battered semiconductor shares ahead of Nvidia's ↗ 2.78% quarterly earnings on Wednesday.

Morning Panic Gives Way to Afternoon Recovery

The KOSPI fell more than 4% in early trading before ultimately closing up 0.68% at 6,742.74, while the Nikkei 225 dropped as much as 1.4% below the 65,000 level before finishing up 0.5% at 65,856.43. The broader Topix gained 0.5% to 4,093.67.tradingkey+2

"The Topix traded higher since the open, which meant that money was flowing into Japanese stocks," said Shuji Hosoi, senior strategist at Daiwa Securities. "Chip-related shares weighed on the Nikkei, and they changed course as South Korea's benchmark reversed its losses."streamlinefeed

The selloff was triggered by overnight weakness on Wall Street, where the Nasdaq 100 fell nearly 1% on Monday and the Philadelphia Semiconductor Index dropped 2.7%. Nvidia fell for a seventh consecutive session — its longest losing streak since 2022 — after the company notified customers of AI-related price increases on systems shipping early next year.moneycontrol+2

Samsung Disappointment Compounds Chip Weakness

South Korea bore the brunt of the early selling. Samsung Electronics fell sharply after its shareholder return plan, announced on August 21, disappointed investors who had hoped for more aggressive buybacks. SK Hynix ↗ 2.78% also declined steeply before both stocks recovered, with Samsung finishing roughly flat and SK Hynix gaining 0.42%.asiae+2

In Tokyo, Advantest and Kioxia led early losses before reversing. Kioxia closed up 0.65% at 51,260 yen after dipping below the 50,000 mark, while SoftBank Group surged 2.25%. Fujikura rose 4.15% and Furukawa Electric advanced 6% as fiber-optic cable makers attracted buying interest.tradingkey+1

All Eyes on Nvidia and Jackson Hole

The recovery came as moderating U.S. Treasury yields eased foreign capital outflow pressures across East Asian markets. Analysts at Kiwoom Securities said the selloff reflected "supply-demand volatility" rather than deteriorating fundamentals, noting that memory prices and earnings estimates remain solid.bloomingbit+2

Markets now await Nvidia's May-July earnings on Wednesday, with analysts expecting quarterly revenue to nearly double to around $92 billion. Federal Reserve Chair Kevin Warsh is also set to speak Friday at the Jackson Hole symposium.newsonjapan

"Nvidia needs to impress in order to keep one leg of the stock market stable, and Warsh needs to provide clarity on interest rates in order to keep the other leg of the stock market stable," said Richard Reyle, chief investment officer at Questar Capital Partners.businesstimes+1