Asian equity markets moved higher on Monday, led by strong gains in Chinese artificial intelligence stocks, as investors showed renewed confidence in the sector. However, overall upside was limited by escalating geopolitical tensions and broader macroeconomic uncertainties.
Trading activity across the region was relatively light due to a public holiday in Japan. Technology stocks outperformed other sectors, supported by the rally in Chinese AI names and momentum carried over from Wall Street’s gains late last week.
Markets also drew modest encouragement from U.S. jobs data, which came in below expectations, though this did little to alter short-term forecasts for interest rate policy.
U.S. equity futures pointed lower, with S&P 500 futures down 0.5% by early Asian trading hours, following reports of a U.S. government investigation involving the Federal Reserve. Fed Chair Jerome Powell described the probe as politically driven, raising fresh concerns about the central bank’s autonomy.
Investor sentiment remained cautious amid a series of global flashpoints, including unrest in Iran, a U.S. military move into Venezuela, rising diplomatic friction between China and Japan, and renewed discussion in Washington about acquiring Greenland.
Technology stocks lead Asian gains as Chinese AI names surge
South Korea’s KOSPI led regional markets, climbing 1.2% as technology and semiconductor shares advanced. Hong Kong’s Hang Seng Index rose 0.8%, driven largely by tech stocks, while mainland Chinese benchmarks—the CSI 300 and Shanghai Composite—posted gains ranging from 0.5% to 1%.
Several newly listed AI companies in Hong Kong saw sharp rallies following strong initial public offerings last week. Knowledge Atlas Tech, trading as Z.AI (HK:2513) and considered the first of China’s so-called “AI tigers” to list publicly, jumped 25%. Fellow newcomer MiniMax Group Inc (HK:0100) surged more than 20%, while chipmaker Shanghai Iluvatar CoreX SemiCon Co (HK:9903) gained nearly 3%.
On the mainland, Cambricon Technologies Corp (SS:688256) rose over 3%.
In Taiwan, shares of Taiwan Semiconductor Manufacturing Company (NYSE:TSM; TW:2330) advanced 1.4% after the company reported strong year-over-year growth in December revenue. Optimism surrounding AI was further supported by NVIDIA’s recent chip launch and upbeat commentary at last week’s CES technology conference.
Despite Monday’s gains, the AI sector continued to recover from significant losses sustained toward the end of 2025, when concerns over elevated valuations and self-reinforcing investment flows weighed heavily on the industry.
Asian markets open 2026 unevenly amid tech strength and geopolitical risks
Asian equities posted gains overall on Monday but entered 2026 on a mixed footing. Ongoing global political tensions dampened risk appetite over the past week, counterbalancing the strength seen in technology shares.
South Korea’s KOSPI and Japan’s Nikkei 225 were among the top performers in the opening week of the year, alongside Chinese markets. In contrast, indices with less exposure to technology underperformed. Singapore’s Straits Times Index rose 0.7%, extending gains after the government signaled potential adjustments to investment strategies at sovereign wealth funds GIC and Temasek.
Australia’s ASX 200 added 0.5%, supported by higher prices for precious and industrial metals, which lifted mining stocks.
India’s Nifty 50 lagged regional peers, slipping 0.5% as uncertainty grew over possible new U.S. trade measures targeting India.
Geopolitical concerns remained a major overhang, with last week’s U.S. action in Venezuela triggering a risk-off move across markets. Tensions between China and Japan also intensified after Beijing outlined potential restrictions affecting Tokyo. Meanwhile, fears of possible U.S. involvement in Iran and slow progress toward a ceasefire in Ukraine continued to keep global investors on edge.
