Asian markets rally as Microsoft profit sparks AI stock rebound

Asian markets surged after strong Microsoft earnings reignited buying in AI-linked technology shares. The rebound eased immediate fears over AI spending returns even as yen volatility and oil risks lingered.Stock photo used for illustrationAsian markets rose sharply on Friday, led by a rebound in South Korean and Japanese technology shares after strong gains on Wall Street. The rally came after Microsoft reported stronger-than-expected quarterly profit, easing worries over whether heavy spending on artificial intelligence would deliver returns.South Korea's Kospi jumped 16.5 per cent in early trade to 6,515.40, while Tokyo's Nikkei 225 climbed 5.5 per cent to 65,282.21. US futures edged higher and oil prices also moved up.Samsung Electronics surged 24.8 per cent and memory chipmaker SK Hynix soared 27.8 per cent as investors returned to AI-related stocks after heavy selling earlier this week. The Kospi had fallen more than 17 per cent over the previous three days as investors dumped technology stocks amid concerns over an AI bubble and rising competition from chipmakers and AI rivals in China.The rebound followed Microsoft's report of stronger-than-expected profit for the last quarter. Its shares jumped 15.5 per cent for their best day in nearly 18 years, with the results seen as a sign that big spending on AI is translating into profits. Traders moved back into technology stocks that had come under pressure over doubts about whether such large investments would bring adequate returns. Despite Friday's surge, the Kospi remains well below the peak of over 9,000 that it hit in June. In Japan, SoftBank Group, an investor in OpenAI, jumped 15 per cent, while chip equipment maker Tokyo Electron rose nearly 11 per cent. "The market went from throwing AI stocks overboard to fighting for the remaining seats before most traders had finished writing the obituary," Stephen Innes of SPI Asset Management said in a commentary.The dollar fell sharply against the Japanese yen overnight amid suspected intervention after trading above 160 yen for weeks. Japan's Nikkei financial newspaper said the intervention was coordinated, with the Federal Reserve Bank of New York conducting what is known as a "rate check", in which it asks banks to provide exchange-rate quotes for currency trades. After dropping more than 2.4 per cent, the dollar bounced back in early Friday trade, gaining 0.6 per cent to 160.59 yen. The Bank of Japan was due later on Friday to wrap up its policy meeting and was expected to keep interest rates unchanged. Analysts said the suspected intervention may have been timed to pre-empt speculative moves linked to the central bank's decision. "Intervention in support of the yen may not work any better now than it has previously, but the persistence of the Japanese authorities suggests to us that the yen will remain around the 160 level this year before staging a more sustained rebound next year," Jonas Golterman of Capital Economics said in a commentary. The euro fell to USD 1.1515 from USD 1.1524.Elsewhere in Asia, Taiwan's Taiex surged more than 7 per cent and Australia's S&P/ASX 200 added 0.5 per cent to 9,015.60. Oil prices rose on tensions between the US and Iran, with the Strait of Hormuz, a key waterway for oil transport, remaining largely closed. Brent crude, the international standard, was up 0.3 per cent at USD 87.14 per barrel. It had been trading near USD 72 a barrel before the Iran war began in late February.On Thursday, Wall Street's benchmark S&P 500 gained 1.7 per cent to 7,437.63, the Dow Jones Industrial Average added 1.2 per cent to 52,208.06, and the Nasdaq composite rose 2.8 per cent to 25,122.18. Overall, Asian markets rebounded strongly on Friday as AI-linked shares recovered, while currency moves in Japan and higher oil prices remained in focus.With PTI Inputs- EndsPublished By: India Today Web Desk Published On: Jul 31, 2026 08:54 IST