Asian stocks headed into the final day of the quarter on track for their best three-month stretch since 2009, a remarkable run powered by the artificial-intelligence boom even as a late-June technology selloff and a weakening Japanese yen rattled investors. With the quarter ending Tuesday, the regional rally has been led by South Korea and the semiconductor companies at the center of the AI trade, according to exchange data and market strategists.

The quarter’s gains have been extraordinary, but the path has been anything but smooth. Markets pulled back sharply late last week after Apple unveiled steep price increases that shook global technology shares and triggered profit-taking across the region.

On Friday, Japan’s Nikkei 225 fell 4.5% to 69,127. Hong Kong’s Hang Seng Index dropped 1.7% to 22,684.76, the Shanghai Composite slipped 1.4% to 4,062.28, and Australia’s S&P/ASX 200 edged 0.2% higher. South Korea’s Kospi also came under pressure after its powerful run earlier in the quarter.

Stepping back from the day-to-day swings, the quarter belonged to South Korea. The Kospi posted one of its strongest performances in decades as demand surged for the memory chips powering artificial intelligence. Semiconductor leaders SK Hynix and Samsung Electronics fueled much of the rally, while global chip stocks remained on pace for one of their strongest quarters on record. Investor enthusiasm proved resilient despite the conflict involving the United States and Iran and continued concerns surrounding the Strait of Hormuz.

The other major story has been the continued weakness of the Japanese yen, which has fallen to its weakest level in roughly four decades. The U.S. dollar has traded just below 162 yen, near its highest level in approximately 40 years. A weaker yen helps Japanese exporters by making their products more competitive overseas but raises the cost of imported food, fuel, and other goods for households and businesses. Currency traders continue watching for possible intervention by Japanese authorities.

Market movers: Japanese technology and semiconductor companies experienced sharp swings throughout the quarter. Tokyo Electron, Sony Group, and Nintendo benefited from the broader AI rally, while AI-related names including SoftBank Group and memory-linked companies such as Kioxia were among those hit hardest during the recent technology pullback.

Several investment banks also adjusted their outlooks. HSBC upgraded South Korea to “neutral” from “underweight,” saying recent foreign selling had reduced downside risks by unwinding crowded positions. Barclays maintained its preference for equities heading into the third quarter, citing continued confidence in the long-term artificial-intelligence investment cycle.

Japan’s economic data also provided encouragement. Government figures showed retail sales rose 5.3% in May from a year earlier, the fastest annual increase since November 2023, supported by government stimulus measures that boosted consumer spending. The stronger retail activity offered a positive sign for an economy that has struggled with slow growth, even as the weaker yen continues to keep import prices elevated.

Commodities and volatility: Oil remained one of the quarter’s biggest variables. Prices surged when fighting intensified around the Strait of Hormuz, a key shipping route for global crude oil and liquefied natural gas, before retreating toward pre-conflict levels after the United States and Iran agreed to halt further attacks ahead of peace talks scheduled this week in Doha, Qatar. Lower oil prices are particularly welcome for energy-importing economies such as Japan and South Korea. Gold remained supported as a traditional safe-haven asset, while measures of market volatility eased after their late-week spike.

The week ahead will determine whether the quarter’s momentum carries into the second half of the year. Investors are watching the Doha negotiations, any indication of Japanese currency intervention, and a fresh round of U.S. economic data, including Friday’s monthly employment report, for clues about where global interest rates may head next.

For now, Asian markets are closing the books on a historic quarter driven by artificial intelligence, but the sharp swings of recent days are a reminder that much of the rally remains tied to a rapidly evolving technology sector where investor sentiment can change just as quickly as it rises.

JBizNews Asia Desk
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