Markets across Asia capped a blockbuster week of gains driven by hopes for a U.S.-Iran peace deal and surging demand for artificial intelligence chips, even as renewed military clashes in the Strait of Hormuz tempered the euphoria on Friday.
MSCI’s Asian stock gauge rose 5.6% for the week ending May 8, its second-biggest weekly advance since September 2024, according to Bloomberg. The rally propelled multiple benchmarks to record highs before Friday’s pullback, which came after Iran’s Revolutionary Guard Corps fired missiles and drones at three U.S. Navy destroyers transiting the Strait of Hormuz on Thursday.
Records Shattered Across the Region
South Korea’s Kospi broke through the 7,000 level for the first time on Wednesday, soaring 6.45% in a single session to close at 7,385, fueled by a semiconductor-led surge in Samsung Electronics and SK Hynix. On Friday, the index edged up 0.1% to close at a record 7,498 despite broader regional weakness. Goldman Sachs raised its 12-month Kospi target from 8,000 to 9,000 in a note on Wednesday, calling South Korea its “highest conviction view” in Asia.
Japan’s Nikkei 225, returning from a five-day Golden Week holiday, posted its largest single-day point gain ever on Thursday, surging 3,320 points to close at 62,833.84 after briefly crossing 63,000 for the first time. Taiwan’s Taiex set its fourth consecutive record close on Wednesday after breaking above 40,000 for the first time earlier in the week, powered by gains in TSMC and MediaTek.
Peace Hopes and AI Fuel the Rally
The week’s momentum was built on two pillars. Reports emerged that the U.S. sent a one-page proposal via Pakistan to end the conflict with Iran and gradually reopen the Strait of Hormuz. Simultaneously, robust earnings from semiconductor firms and explosive AI chip demand kept technology stocks on a tear, with the Philadelphia Semiconductor Index hitting a record high.
Friday Pullback Tests Resolve
The mood soured on Friday after U.S. Central Command confirmed it struck Iranian military sites in Bandar Abbas and Qeshm Island following what it called “unprovoked” Iranian attacks on U.S. warships. President Donald Trump told reporters the ceasefire remained intact. The Nikkei fell 1.1%, Hong Kong’s Hang Seng dropped 0.9%, and Australia’s S&P/ASX 200 lost 1.5%. Brent crude climbed back above $100 a barrel, underscoring the persistent risk premium from the conflict that began in late February.
