Asian stock markets stabilized and recovered on Tuesday, halting a three-day losing streak, as easing Middle East tensions and a subsiding sell-off in the artificial intelligence sector boosted market sentiment.
The MSCI Asia Pacific Index rose 0.7% overall, marking its first gain in three days. South Korea's KOSPI led the gains, staging a significant rebound of approximately 4% at one point, with the Kosdaq index also climbing 3.7%.
Japan's Nikkei 225 index rose more than 1% at its peak, while the Topix index gained 1.22%.
Meanwhile, Australia's S&P/ASX 200 index fell 1.33% upon resuming trading after a holiday, showing relative weakness.
Brent crude oil prices declined 0.4% to below approximately $94 per barrel, reflecting eased market concerns over Middle East supply risks. Gold edged down 0.1% to around $4,325 per ounce, while the U.S. dollar index saw little change.
This rebound was underpinned by Iran and Israel agreeing to de-escalate their military actions, providing support to a market previously pressured by escalating geopolitical conflict. Concurrently, a rebound in U.S. chip stocks overnight provided a positive spillover effect for Asia's technology sector. The S&P 500 index rose 0.3% on Monday, and the Nasdaq Composite gained 0.86%, partially recouping losses from last week's tech sell-off.
Easing Middle East Tensions and Market Sentiment Recovery
The phased de-escalation between Iran and Israel served as a key catalyst for this round of Asian market recovery. Iran's Foreign Ministry stated that its military had ceased attacks on Israel but warned that hostilities would resume if Israel continued to attack Lebanon. Former U.S. President Donald Trump posted on Truth Social the same day, stating that Israel and Iran "are looking to have an immediate ceasefire."
However, the market remains cautious in its assessment of the situation. Whether the vital energy passageway of the Strait of Hormuz can be substantially restored to normal operation remains a key focus for traders. Over the weekend, a small number of commercial vessels had returned to the waterway, but risks persist, with some ships even sailing with their digital transponders switched off.
AI and Chip Trading Resurges, But Sustainability Questioned
The brief stabilization in the artificial intelligence and semiconductor sectors provided crucial support for Asian technology stocks. In the U.S., chip stocks led gains in the S&P 500 on Monday, with the Nasdaq Composite rising nearly 0.87%.
Nevertheless, the market is divided on the longevity of this theme. GQG Partners portfolio manager Brian Kersmanc stated in a CNBC interview, "The long-term question is sustainability—how long can this last?" He further noted, "At the end of the day, a lot of these chip names are commodities. If a certain type of memory chip has gone up 15 times in the last year, that's the equivalent of oil going from $60 a barrel to $900 a barrel. How many people would be buying energy stocks at that point?"
Bull-Bear Divergence Intensifies, Institutional Views Split
Institutional investors' views on the market outlook show clear divergence. Morgan Stanley strategist Mike Wilson maintains a constructive stance, believing corporate earnings and strong economic data continue to support the bull market's extension. He stated that "markets rarely go straight up at the pace seen since the March lows, a pullback is inevitable and healthy for the bull market to continue into year-end."
A team led by Citigroup strategist Scott Chronert raised their year-end target for the S&P 500 index following "significant upward revisions" to earnings expectations. Mark Haefele of UBS Global Wealth Management said, "We do not believe investors are losing faith in the AI story, and despite recent pressure on tech stocks, the fundamentals remain sound."
On the other hand, a team led by Bank of America Securities strategist Savita Subramanian adopted a cautious tone. In a report dated June 5th, they pointed to a growing number of "bear market signals" suggesting the market top is nearing, advising investors to "take profits" and stating there are currently "too many red flags."
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