Asian Stock Markets Rebound After Technology Shares Suffer Heavy Losses

Asian stock markets recovered on Monday following a major sell-off in technology stocks last week, which was triggered by the Democratic Party’s sweeping victory in the United States midterm elections.

Major stock indexes in Japan, Taiwan and Australia recorded gains, following a recovery on Wall Street on Friday, as investors reassessed concerns surrounding the technology sector and the future of artificial intelligence (AI) investments.

Taiwan’s Taiex led the regional recovery, closing 4.94 per cent higher.

In Japan, the benchmark Nikkei 225 gained 2.33 per cent, while Australia’s S&P/ASX 200 edged up 0.099 per cent.

However, the recovery was not reflected across all Asian markets. South Korea’s KOSPI dropped 0.8 per cent after initially recording a gain of approximately 1.7 per cent. Hong Kong’s Hang Seng Index also declined by 0.22 per cent.

Cameron Chui, an Asia equity strategist at JP Morgan Private Bank in Hong Kong, attributed the recent decline in artificial intelligence-related stocks to tighter financial conditions, increasing concerns about credit availability for cloud computing companies and uncertainty surrounding possible delays in AI infrastructure development following the US midterm election results.

However, he noted that demand for artificial intelligence and its adoption remained strong, adding that investment spending projections for 2027 were still encouraging.

Chui said the significant decline in stock valuations had already taken some of the market’s concerns into account.

He also identified Taiwan and South Korea as markets with attractive investment opportunities, although he warned that the possibility of weaker corporate earnings in 2028 had increased.

Meanwhile, futures linked to Wall Street’s benchmark S&P 500 index rose by 0.17 per cent as of 7:30 GMT, while Nasdaq 100 futures, which track major technology stocks, declined by 0.24 per cent.

The movement in US stock futures followed fresh developments involving American semiconductor giant Nvidia and its Chief Executive Officer, Jensen Huang.

Nvidia’s board of directors announced that the company would conduct an independent investigation into allegations involving Huang’s romantic relationship with a woman accused of being a Chinese spy.

Although the board expressed confidence in Huang and said there was no reason to believe that national security or confidential company information had been compromised, it confirmed that the investigation would examine all available information.

The board also disclosed that Huang supported the inquiry and had promised to cooperate fully with the process.

According to the company, protecting US national and economic security remained a major priority for Nvidia and its shareholders.

The latest recovery in Asian markets followed a massive sell-off on Wall Street last Thursday, when approximately $2.5 trillion was wiped off market valuations amid concerns about the implications of the US midterm election results.

Investors had become worried that Democratic-controlled legislatures could introduce obstacles or delays to the expansion of data centres and other infrastructure required to support the growing artificial intelligence industry.

These concerns triggered widespread selling of technology shares, with the downturn spreading to Asian markets on Friday.

During that trading session, Japan’s Nikkei 225 plunged approximately six per cent, while South Korea’s KOSPI suffered a decline of about nine per cent. Hong Kong’s Hang Seng Index also lost more than one per cent.

Monday’s rebound suggests that investors are cautiously returning to the market following last week’s significanty losses, although uncertainty surrounding technology investments, artificial intelligence infrastructure and the broader economic outlook continues to influence market movements.

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