Asian Markets Today: Kospi surges 5%, Nikkei gains 3% after Wall Street's best day in 7 months - What's fuelling rally?

Asian stocks today: Asian equity markets traded sharply higher on Tuesday, tracking a strong overnight rally on Wall Street, where technology shares staged a recovery and falling crude oil prices helped US benchmarks record their best session in seven months. South Korea led the regional advance, while Japanese equities also rebounded after suffering heavy losses in the previous week.

Meanwhile, Indian equity markets remained closed on Tuesday for Diwali-Balipratipada, leaving global cues in focus ahead of the next domestic trading session.

MSCI Inc.’s gauge of regional equities climbed 1.6%. South Korea's Kospi Index jumped more than 5% in early trading, while Japan's Nikkei 225 advanced nearly 4%. A broader gauge of Asian shares rose 1.5%, and futures tracking US benchmark indices edged higher. Among other regional markets, Hong Kong's Hang Seng Index gained 0.31% to 24,517, while Singapore's Straits Times Index slipped 0.04% to 5,257.

The recovery in Japan followed a nearly 6% decline in the Nikkei on Friday, when artificial intelligence-related stocks came under intense selling pressure. Technology investor SoftBank Group surged 14.38% on Tuesday, while semiconductor equipment makers Advantest and Tokyo Electron gained 4.93% and 5.66%, respectively. Memory-chip maker Kioxia also jumped 7.6%, reflecting renewed buying interest in the sector.

The gains across the region followed a strong performance on Wall Street on Monday. The S&P 500 recorded its biggest single-day rally in last 7 months, since April 8, while the Nasdaq 100 ended 3.4% higher. A gauge of semiconductor stocks surged nearly 7%, signalling a broad recovery in chipmakers.

Why are global markets rising?

The latest rebound followed a volatile week for technology stocks, with investors concerned that the Democrats' decisive victory in the US midterm elections could lead to tighter regulation of the artificial intelligence industry and slow investment in the sector. The resulting uncertainty had triggered selling in chipmakers, weighing on broader market sentiment.

However, the strong performance on Monday suggested that investors were willing to return to technology stocks despite regulatory concerns. Nvidia was among the exceptions, with its shares falling 4.3% during the US session and around 4.2% in overnight trading. The company remained in focus amid reports surrounding Chief Executive Officer Jensen Huang, including allegations about his relationship with a woman identified in a series of reports as a suspected Chinese spy. Investors appeared to view the developments as largely company-specific rather than a wider threat to the artificial intelligence industry, Reuters reported.

Crude oil prices provided another source of support for equities. Brent crude slumped almost 6% in the previous session to settle below $93 a barrel, while US oil prices held on to losses in Asian trading. The decline followed comments from US President Donald Trump that further strikes on Iran would not be necessary, although he added that the US remained "locked and loaded". The remarks indicated that Washington could be moving towards winding down the conflict, easing immediate concerns over further escalation.

The decline in oil prices has also helped temper inflation fears, which had added to uncertainty across financial markets. Investors will now watch October US consumer price index data, scheduled for release on Tuesday. The report is expected to show smaller price increases than in September and could offer fresh clues about the inflation outlook and the US Federal Reserve's monetary policy.

Indian markets on Monday

Indian equity markets remained closed on Tuesday on account of Diwali-Balipratipada. In the previous trading session on Monday, domestic benchmark indices ended marginally higher after moving between gains and losses through the day.

The BSE Sensex closed at 81,106.65, gaining 107.25 points or 0.13% from its previous close of 80,999.40. The NSE Nifty 50 settled at 25,044.65, rising 58.25 points or 0.23% against its previous close of 24,986.40.

With domestic exchanges shut, global developments, particularly the movement in technology shares, crude oil prices, and US inflation data, remained important cues for investors ahead of the reopening of Indian markets.