Asian stocks rose on Thursday as an artificial intelligence-fueled rally in China and reports of dealmaking activity in Japan’s technology sector helped offset headwinds from hot U.S. inflation data.
Broader technology stocks in Asia also rose amid persistent hopes that AI will continue to underpin the sector in the coming years.
Risk appetite was also aided by U.S. President Donald Trump talking up a peace treaty between Russia and Ukraine, which could mark an end to the three-year-long conflict. Oil prices tumbled on this notion.
Regional markets mostly brushed off a middling lead-in from Wall Street, as U.S. stocks fell in overnight trade following stronger-than-expected consumer price index inflation data. The reading further dented expectations of lower interest rates.
But losses were limited by a batch of strong earnings, with U.S. stock index futures also rising in Asian trade.
Still, risk appetite remained skittish in the face of higher trade tariffs under U.S. President Donald Trump, who imposed steep tariffs on commodity imports this week and threatened to introduce reciprocal tariffs on major U.S. trading partners.
China tech rally powers on amid AI hype
China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes rose slightly on Thursday, while Hong Kong’s Hang Seng index jumped 1.1% to a four-month high.
Chinese markets are trading up between 5% and 15% since mid-January, with gains linked entirely to increased optimism over the country’s AI capabilities. This trend was sparked by the release of DeepSeek R1 in late January.
UBS analysts said the stock rally still had legs, at least based on historical, thematic rallies in Chinese markets. They added that Chinese markets were less than halfway through their ongoing rally.
Still, barring tech and AI-related sectors, sentiment towards broader Chinese markets was less upbeat, especially in the face of a brewing trade war with the U.S.
Trump had last week imposed 10% tariffs on China, drawing ire and retaliation from Beijing.
Japanese stocks rise on weak yen, tech M&A
Japan’s Nikkei 225 index jumped 1.2%, while the TOPIX index added 0.9%.
Gains were driven chiefly by export-oriented stocks, which rose tracking a sharp drop in the yen this week. The USD/JPY pair rose sharply from two-month lows hit earlier in February, even as Japanese producer price index inflation data read stronger than expected in January.
Cybersecurity firm Trend Micro (OTC: TMICY) Inc. (TYO:4704) was the best performer on the Nikkei, rallying over 16% after Reuters reported that the firm was subject to a bidding war between several private equity giants, including Bain Capital, Advent International, and EQT (ST: EQTAB).
Broader Asian markets were mostly higher, although investors were still bracing for higher-for-longer U.S. interest rates amid sticky inflation. Federal Reserve Chair Jerome Powell also reiterated this trend during a Congressional testimony this week.
Australia’s ASX 200 rose 0.2%, while Singapore’s Straits Times index fell 0.2%.
South Korea’s KOSPI jumped 0.9% on strength in chipmaking stocks, which have some exposure to China’s AI boom.
Futures for India’s Nifty 50 index pointed to a mildly positive open, although the Nifty was nursing six straight sessions of losses amid worsening sentiment towards India. The threat of increased U.S. tariffs against India also weighed on local stocks.
