Japanese, South Korean tech rally overshadows geopolitical risks in global markets

Global markets enjoyed a tech rally in the stock markets of Japan and South Korea last month, despite ongoing geopolitical risks in the Middle East influencing market direction.

Risks stemming from the Middle East war continued to shape global markets in May, but the positive momentum led by rising tech stocks outweighed the negative sentiment. Strong corporate earnings in the US extended to Asian markets.

Chipmakers Nvidia and AMD's strong earnings reports demonstrated that there is still a high demand for artificial intelligence (AI), which boosted Asian technology stocks.

The suspension of a planned strike by around 50,000 Samsung Electronics workers over a wage dispute reflected positively on Asian stock markets.

Investors refocused on AI with Nvidia’s strong earnings, analysts say.

Risk appetite surged amid expectations of a potential deal between the US and Iran despite ongoing geopolitical risks.

Estimates that a deal would boost maritime trade traffic through the Strait of Hormuz, relieving Asian economies that rely heavily on energy imports from the Gulf, fueled gains in Japanese stock markets.

Asian markets enjoyed increased risk appetite following US President Donald Trump’s visit to China, with Nvidia CEO Jensen Huang also present among his delegation of tech leaders, driving up chipmaker shares in the region.

Meanwhile, Japan and South Africa have agreed to strengthen the critical mineral supply chain. While details are unknown, the cooperation increased confidence in Japan's ability to meet its critical mineral needs.

Despite ongoing geopolitical risks, the sharp rises in tech stocks drove South Korea’s Kospi Index up 28.5% and Japan’s Nikkei 225 by 11.4% last month.

South Korean firm SK Hynix provided investors a return of 81.4%, Samsung Electronics 43.8%, and LG Electronics 107.9% at the same time.

China’s Shanghai Composite Index and Hong Kong’s Hang Seng Index declined 1.1% and 2.3%, respectively.

The tensions in the Middle East led to ripple effects felt more and more distinctly across markets, affecting Chinese and Hong Kong stock markets.

China’s consumer price index (CPI) for April surged 1.2%, above estimates, following a 1% increase in March.

The country’s producer price index (PPI) for April increased 2.8%, above the 1.8% estimate, marking its fastest since July 2022, following a 0.5% uptick in March.

Concerns over economic activity in China grew amid the country’s cost-driven inflation.

*Writing by Emir Yildirim