On Friday, Asian stock markets got some relief from the heavy selling pressure on tech and artificial intelligence stocks throughout the week. Most major indexes recovered their morning losses, and Chinese shares managed to edge higher after slipping straight into a bear market a day earlier.
Japan did not share the optimism. Shares in Tokyo remained in the red after the latest September inflation data came out, giving the Bank of Japan more reason to raise interest rates again soon.
Traders across the region were still reeling from the fallout from a poor session on Wall Street. Overnight, the Nasdaq suffered its worst one-day decline since June. Investors started taking cash off the table as they worried that tech companies were spending too much cash on AI without seeing enough benefits in return. A series of weak earnings reports have made those concerns worse.
US stock futures were quiet during Asian trading hours. Meanwhile, the ongoing conflict in the Middle East pushed crude oil prices to a five-month high, making investors even more hesitant to take big risks.
South Korea Recovers from Lows as SK Hynix Drops Solidigm IPO
A rapid change was seen in South Korea on Friday. The KOSPI index fell as much as 3% to a three-month low in morning trading, but buyers stepped in, pushing the index up 0.2%. Even with that bounce, the KOSPI was still poised to end the week down more than 4%.
Memory chip giant SK Hynix (KS:000660) led the work. The stock fell more than 3% after the opening bell and then rebounded to rise as much as 4%. The change comes as the company confirmed it has canceled plans to list its flash memory unit, Solidigm, on a US exchange.
At the same time, a Bloomberg report revealed that sister company SK Hyper is talking with several big tech investors about financing a massive $350 billion AI buildout. Even after Friday's jump, SK Hynix shares are still down about 34% over the past month as AI stocks continue their big rally. Samsung Electronics (KS:005930) also recovered from its early losses and ended the day flat.
China stocks bounce back after reaching bear market territory
In mainland China, the Shanghai Sensex CSI 300 and Shanghai Composite both hit 15-month lows. The CSI 300 rose 1.8% on Friday, while the Shanghai Composite rose 0.9%.
The recovery actually kicked off in Hong Kong, where the Hang Seng index opened in the red before rallying 1.2%.
On Thursday, the CSI 300 officially entered a bear market after falling more than 20% from its June high. This steep decline was mainly caused by tech and AI stocks giving back their huge gains earlier this year. Even with Friday's green candles, mainland indices were still headed for an eleventh consecutive week of losses.
A strong Chinese yuan, which touched a four-year high earlier in October, is also making life difficult for local exporters. Moreover, a series of lackluster economic reports continue to remind traders that China's economy is having difficulty gaining momentum, despite continued support from policymakers in Beijing.
Japanese stocks fall as inflation exceeds central bank's target
Japan's Nikkei 225 fell 0.25%, just above a three-month low hit earlier in the day. The broader TOPIX index slipped 0.9%, also hitting its worst low of the session.
This week's global decline in tech and AI names dealt a direct blow to local stocks. Adding to the headache, Friday's consumer price index showed core prices above the Bank of Japan's 2% target for the first time since December 2025.
That inflation number prompted traders to bet that the central bank would have to raise interest rates again to keep the cost of living under control. The Bank of Japan meets next week and market watchers widely expect officials to raise their annual inflation forecast. There were also reports that Tokyo could end consumer fuel subsidies in December, which could push prices even higher.
Activity in the rest of the area remained fairly quiet. Singapore's Straits Times Index gained modestly, while Australia's ASX 200 closed flat. India's Nifty 50 was the clear underperformer, falling 1.1% by midday.
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Key Tips for Asian Stock Traders
- AI evaluation under pressure:Big tech names are facing a serious reality check. The quick bounce shows that buyers are still interested, but market sentiment remains cautious regarding heavy AI spending.
- Bank of Japan See:With core inflation remaining above 2%, a rate hike is certainly on the table, which could keep pressure on Japanese equities in the short term.
- China's bear market is not over:While Chinese stocks got a welcome bounce on Friday, eleven consecutive weeks of losses and weak economic data mean the market still lacks strong buying confidence.
- Energy prices present a wildcard:Rising oil prices due to Middle East tensions could squeeze corporate margins and trigger another bout of market volatility if crude stays high.