Asian equity markets rallied hard on August 13, led by a surge in AI and semiconductor names that pushed Japan's Nikkei 225 up as much as 1.7% and South Korea's KOSPI nearly 4% higher. The Nikkei's advance added roughly ¥20 trillion, or about $128 billion, in market value, while the KOSPI climbed to a three-week high, extending its recovery to almost 30% above the low it hit during a sharp sell-off in late July.
The rally in Seoul was driven by heavyweight chipmakers: Samsung Electronics jumped 5.4% and SK Hynix surged more than 7%, as investors bet on continued strength in AI-related semiconductor demand after a run of stronger-than-expected earnings from the sector. The gains came alongside broader risk appetite across the region, with Wall Street's own AI-led rally the previous session setting the tone for Asian trading.
A Mixed Inflation Picture
Cooling US inflation data also played a role: July's US Consumer Price Index came in at 3.4% year-over-year, matching forecasts and easing near-term concerns about Federal Reserve tightening, which supported risk sentiment across Asian markets alongside the AI-driven buying. Japan's own inflation picture was more mixed. The Bank of Japan's Corporate Goods Price Index release showed producer prices rose 7.2% year-over-year in July, undershooting the 7.4% consensus forecast and slowing modestly from June's 7.3% pace, with oil and coal products, chemicals and nonferrous metals leading the increase.
Central Bank Implications Still Loom
Even with the slight downside surprise, Japan's producer price gains remain close to a three-and-a-half-year high, keeping pressure on the Bank of Japan as it weighs the timing of further rate increases. Persistently elevated wholesale inflation has kept bets on a September BOJ hike alive even as equity markets in both Japan and South Korea pushed higher on the AI trade, underscoring how the region's stock rally and its underlying inflation dynamics are currently pulling in different directions.
