The US stock market is not the sole market that has climbed to record highs.
Stock indices across Taiwan, South Korea, and Japan have solidified new peaks in recent trading sessions, recovering from the downturn experienced in March.
These Asian nations rely heavily on oil imports originating from the Middle East, a supply that was severely hampered following the conflict involving Iran. Nevertheless, this blow to their economies did not prevent their stock markets from surging in the past few weeks.
South Korea’s benchmark Kospi and Taiwan’s Taiex index both reached all-time highs on Wednesday. Japan’s flagship Nikkei 225 index hit a record high last week. Concurrently, the S&P 500 and Nasdaq Composite in the US also achieved record levels on Wednesday.
The enthusiasm seen in Asian and American markets is largely attributable to the global fervor surrounding Artificial Intelligence. This AI-led rally has overshadowed some of the risks associated with the war with Iran. Semiconductor chips are experiencing very high demand driven by the push to develop AI infrastructure, which has particularly benefited Asian markets.
In contrast, markets in countries with less direct exposure to the AI boom—such as those in Europe—have not witnessed comparable gains.
“Different regions have different potential tailwinds, but much like the US, a large part of Asia is positioned to benefit from the AI capital expenditure cycle,” remarked Daniel Sleigh, Head of Investment Solutions Group Market Strategy at Morgan Stanley.
South Korea and Taiwan Shine Brightly
While the US is a net energy exporter, nations like Japan and South Korea are net energy importers. This distinction means Asian economies feel the pinch of rising oil prices more acutely.
However, on these markets, the excitement surrounding AI is propelling stock prices upward, overriding concerns regarding escalating energy costs and the potential drag on consumer spending and overall economic expansion.
South Korea stands as a global leader in semiconductor chips, leading to a sharp ascent in its stock market: the Kospi index has surged by nearly 76% since the start of 2025—its best performance since 1999—and has already advanced by 75% this year. This surge propelled the South Korean stock market past Canada’s to become the seventh largest globally on Thursday.
Samsung Electronics soared this week, crossing a market capitalization of $1 trillion, becoming the second Asian firm, following Taiwan Semiconductor Manufacturing Company (TSMC), to hit this milestone.
Meanwhile, Taiwan’s Taiex has climbed 16% since the war began. The Taiex has risen by 42% year-to-date. In April, Taiwan became home to the sixth-largest stock market globally, also overtaking the Canadian market.
“Asian markets are reacting well to the latest peace efforts and the momentum from chip manufacturers,” noted Jim Reid, Global Head of Macro Research at Deutsche Bank, in a memo.
The Strait of Hormuz effectively closed in early March, cutting off one-fifth of the world’s oil supply. Japan’s Nikkei 225 index rapidly declined by 13% by March 31st.
Yet, the index rebounded sharply, mirroring the recovery in US equities, erasing war-related losses and hitting a record high on April 16th. The Nikkei index is up 1% since the conflict with Iran started and has gained 18% this year.
Investors are leaning towards optimism regarding a cessation of hostilities, but the rapid ascent also underscores the immense significance of global AI expansion. Artificial intelligence, semiconductor firms, and data center-related companies account for roughly 50% of the weighting in Japan’s Nikkei 225 index, according to JPMorgan Chase data.
“Investors have returned to comfort zones where they see profits and where those profits are being generated? That’s US tech, that’s the AI ecosystem,” stated Arun Sai, Senior Multi-Asset Strategist at Pictet Asset Management.
Mixed Fortunes for Other Global Equities
While Asian markets continue to reach new historical peaks, European markets remain below their pre-Iran conflict levels.
Similar to Asia, Europe depends on the Middle East for its oil supply. However, Europe features fewer technology-focused and AI-centric companies compared to the US and Asia. This partially explains why the region’s markets have yet to achieve record valuations.
Germany’s Dax index is still down over 1% since the conflict began and is roughly flat on a year-to-date basis. Europe’s benchmark STOXX 600 is down almost 2% since the war started, despite having gained 5% this year.
Conversely, energy-exporting nations in South America have benefited from the surge in oil prices. Brazil’s Bovespa index is roughly unchanged since the war with Iran commenced but has risen 16% year-to-date.
“Asia has no energy but has AI. Latin America has no AI but has energy. Europe has little of either,” commented David Russell, Head of Global Market Strategy at TradeStation.
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