On Wednesday, Asia-Pacific markets experienced a significant advance, buoyed by a tech rally on Wall Street primarily driven by the performance of chipmaker Nvidia. South Korean stocks led the gains, with shares of Nvidia soaring nearly 3%, extending the company's previous gains and pushing its market capitalization above that of Microsoft for the first time since January.
Other chip companies, such as Broadcom and Micron Technology, also saw impressive increases, with stock prices rising more than 3% and 4%, respectively. The robust performance in the technology sector has set a positive tone for the broader markets.
The South Korean markets reacted positively as opposition party leader Lee Jae-myung secured victory in the presidential election. The Kospi index surged by 2.43%, reaching its highest level since August of last year, while the small-cap Kosdaq index rose 1.39%. According to John Cho, a Korea equity portfolio manager at J.P. Morgan Asset Management, Lee's election pledge aims to significantly enhance the value of the Korean stock market.
Lee's proposed amendments to the commercial law are designed to expand the legal responsibilities of board members to include safeguarding the interests of minority shareholders. This legislative change is expected to encourage corporate boards to prioritize value-accretive decisions over those that may be detrimental to shareholder value. Cho expressed optimism regarding the incoming government's potential for implementing aggressive fiscal stimulus to rejuvenate the domestic economy while navigating international trade challenges effectively.
Looking ahead, Cho anticipates a rebound of the domestic economy from a low base, projecting an upturn in the second half of 2024 and the first half of 2025. He remains bullish on globally competitive manufacturers, particularly those focused on high bandwidth memory (HBM) for artificial intelligence, health and beauty sectors, and heavy industries.
In Japan, the benchmark Nikkei 225 index climbed 0.82%, while the broader Topix index increased by 0.53%. Meanwhile, Mainland China's CSI 300 index gained 0.52%, and Hong Kong's Hang Seng Index added 0.72%. Australia's S&P/ASX 200 also saw a rise of 0.77%. However, the country's economic growth for the first quarter of 2025 was reported at 1.3% year-on-year, falling short of economists' expectations of 1.5% growth, despite remaining unchanged from the previous quarter.
In India, the benchmark Nifty 50 index advanced by 0.15%, while the BSE Sensex ticked up 0.11%. U.S. futures remained relatively stable after Wall Street's surge, supported by the tech rally and a better-than-expected jobs report indicating resilience in the U.S. labor market despite ongoing concerns regarding tariffs.
Overnight in the U.S., the broad-based S&P 500 index increased by 0.58%, closing at 5,970.37. The Dow Jones Industrial Average rose by 214.16 points, or 0.51%, ending at 42,519.64, and the Nasdaq Composite climbed 0.81%, settling at 19,398.96. While the economic outlook for the U.S. remains clouded by tariff-related uncertainties, the timing of potential impacts seems delayed, according to Preston Caldwell, chief U.S. economist at Morningstar.
Caldwell noted that the negative demand-side effects stemming from tariffs appear to have lessened for the time being, bolstered by improved financial conditions. He also highlighted President Donald Trump's willingness to consider easing tariffs in response to worsening economic conditions. Caldwell revised the risk of a U.S. recession to approximately 25%, down from the earlier estimate of 35% to 40% made in April.
