Asian stocks gain, Nikkei 225, KOSPI hit fresh record highs on AI optimism

Asian equities advance on Monday as technology shares extended gains amid continued enthusiasm for the artificial intelligence-driven rally. However, traders may adopt caution due to highly fluid developments surrounding United States (US)-Iran peace negotiations.

During the Asian hours, Japan’s Nikkei 225 and South Korea’s KOSPI hit fresh record highs of 67,231 and 8,874, respectively. Hong Kong’s Hang Seng is up by 1.04%, trading around 25,450. However, China’s SSE Composite Index falls 0.12% to near 4,060 at the time of writing.

Traders continue to monitor developments in the Middle East as oil prices advance and the US dollar strengthens amid stalled progress toward a permanent US-Iran ceasefire. Although these elevated geopolitical tensions keep energy markets in sharp focus, broader Asian equities remain well-supported by a steady global risk appetite.

Japanese stocks appreciate as domestic firms deepen their integration into the global expansion of AI infrastructure, helping position the local market among the strongest beneficiaries of the worldwide tech surge. Leading the gains in this sector were heavyweights like Kioxia Holdings and SoftBank Group.

On the data front, Japan's final S&P Global Manufacturing Purchasing Managers' Index (PMI) was confirmed at 54.5 for May 2026, matching preliminary estimates. While this is down from April’s peak of 55.1, which was the highest since January 2022, the latest reading still signals expansion, albeit at a slower pace supported by steady output growth. However, corporate capital spending flatlined in the first quarter, missing market expectations and marking a sharp deceleration from the 6.5% year-on-year growth seen in the final quarter of 2025.

South Korea’s KOSPI rises amid booming semiconductor exports and relentless AI-driven demand. The country's total exports surged 53% year-on-year to a record $87.8 billion in May, led by a staggering 169% jump in semiconductor shipments that reinforced optimism over the sector’s corporate earnings outlook. Samsung Electronics led the market advance, while investors also looked ahead to Nvidia CEO Jensen Huang’s visit to South Korea later this week, which has raised expectations for major new AI and semiconductor partnership opportunities.