Asia rallies on chip rebound and Japan pension-flow hopes as Iran risk fades
The rally across Japanese and Korean equities is being driven almost entirely by a chip-sector rebound following a large US capex pledge from a major memory maker, spilling over into Wall Street’s overnight tech gains and lifting AI-linked names across both markets. In Japan, the more structurally important move may be in bonds and the yen, where hints of a shift in how the country’s giant pension pool allocates capital domestically have done more to support the currency than outright intervention has managed in recent months. Korea’s picture is messier: equities are sharply higher on the day but still nursing a third straight weekly loss, while the won whipsawed between a modest slide and a modest recovery after the country’s top currency official pushed back on the scale of recent weakness. Broader risk sentiment is, for now, looking past the renewed Iran-US friction that has periodically jolted oil and currency markets this year.
—
Chips are doing the heavy lifting across Asia today, but it’s the quieter story in Japan’s pension flows that could matter more for the yen over time.
Summary:
- Japan’s Nikkei climbed roughly 2%, while the broader Topix added close to three quarters of a percent, led by chip-related names
- Japan’s 10-year government bond yield eased back from a three-decade high, and the yen firmed against the dollar
- The moves followed comments from Japan’s finance minister that the government will look to encourage GPIF and other pension funds to lift domestic asset holdings
- South Korea’s Kospi jumped more than 4% on a chip-led rebound but remains on track for a third straight weekly decline
- Korean chipmakers and battery, steel and biotech names posted broad gains, with market breadth strongly positive
- The won weakened modestly before recovering some ground after Korea’s top currency official said the exchange rate remains out of step with fundamentals
- Korean bond yields were mixed, with shorter maturities easing slightly and longer maturities ticking up
Japanese and South Korean equities rallied on Friday as a rebound in AI-linked chip stocks swept across the region, following a large US infrastructure investment pledge from a major American chipmaker that fuelled an overnight tech rally on Wall Street, according to Reuters.
Japan’s Nikkei 225 climbed by around two percent, while the broader Topix added close to three quarters of a percent. Chip names led the advance, with a major silicon wafer maker jumping to its highest close in roughly two decades and a leading chip-testing equipment maker also posting a strong gain, alongside a sharp rise in a large tech-investment conglomerate. Retail and insurance names lagged, with a major clothing retailer suffering its steepest one-day drop in months.
The more notable move may have come in Japan’s bond and currency markets. The 10-year government bond yield pulled back meaningfully from a three-decade high, while the yen firmed against the dollar, both moves tied to remarks from Japan’s finance minister that the government intends to explore measures encouraging pension funds, including the country’s giant public pension pool, to substantially increase their holdings of domestic financial assets. With roughly half of that fund’s strategic allocation currently sitting in foreign assets, even a modest structural shift toward domestic holdings would represent a meaningful new source of demand for Japanese bonds, equities and the currency itself, a dynamic that appears to be doing more to support the yen for now than prior efforts to talk it up.
In South Korea, the Kospi surged more than four percent on the same chip-led rebound, with heavyweight semiconductor, battery, steelmaking and biotech names all posting strong gains and advancing issues vastly outnumbering decliners. Even so, the index remains on pace for a third consecutive weekly decline after a volatile stretch driven by swings in AI demand sentiment. The won slipped modestly against the dollar before paring some of that loss after the country’s deputy finance minister said the currency remains misaligned with underlying fundamentals and that authorities have ample room to intervene if needed, adding that supply and demand dynamics are expected to shift later in the year as exporters’ dollar holdings begin flowing back through forward markets. Korean government bond yields were mixed, with the shorter end easing slightly and the longer end ticking modestly higher.
Broader currency markets showed the dollar softening against a basket of peers, with the euro, sterling and Australian and New Zealand dollars all firmer, while markets largely looked past a renewed flare-up in US-Iran tensions that has periodically clouded the outlook for oil and inflation this year.
This article was written by fl6553e4b45d84486a91658a8b3f02bf22 at investinglive.com.