Nikkei, Kopsi, Topix: Asian stock exchanges on the road to recovery – AI stocks are driving Nikkei

The hope of an easing of tensions in the Iran war provides confidence. Investors are focusing on US inflation data, which could provide information about future interest rates.

Singapore, Tokyo. The Asian stock markets are following the upward trend on Wall Street. Falling oil prices and hopes of an improvement in the situation in the Middle East are brightening the mood on the markets. US President Donald Trump said on Monday that he would forego new military strikes against Iran for the time being.

In Tokyo, the Nikkei index, which includes 225 stocks, rose 2.0 percent to 59,938 points, making up for a large part of Friday's losses in the last two trading days.

The broader Topix was 1.6 percent higher at 3,878 points.

The South Korean Kospi rose by more than five percent.

MSCI's broad index of Asia-Pacific shares gained 1.5 percent, moving away from its seven-month low hit the previous week.

The Shanghai Stock Exchange remained almost unchanged at 3,663 points.

The CSI 300 index of the 300 most important Chinese companies on the mainland stock exchanges stagnated at 4,058.95 points.

The latest developments raised hopes of an early end to the conflict in the Middle East, said Nick Twidale, chief market strategist at ATFX Global. However, the risk now is that the markets have moved too far and too fast. “Any indication of a breakdown in negotiations could lead to a significant price increase as traders would quickly price in the geopolitical risk premium.”

Investors in Asia are also looking at upcoming US inflation data, which could provide insight into future interest rates. "The Nikkei's strong gains in the last two sessions are a surprise," said Kazuaki Shimada, chief strategist at IwaiCosmo Securities. “However, gains were limited as investors did not want to bet on the Nikkei breaking above 61,000 points.”

The Nikkei fell almost six percent on Friday. AI stocks fell on concerns that the US Congress would curb investment in artificial intelligence following the Democrats' landslide victory in the midterm elections.

Winners in Asia include technology investor SoftBank Group, which rose 14.38 percent, and semiconductor stocks Advantest and Tokyo Electron, which rose 4.93 percent and 5.66 percent respectively. Japanese memory chip maker Kioxia jumped 7.6 percent.

The gains came despite Nvidia falling 4.2 percent overnight on Wall Street amid controversy surrounding CEO Jensen Huang. “The market so far sees the impact of the issue as being limited to Nvidia rather than the broader industry,” said IwaiCosmo’s Shimada.

The losers include Toyota Motor with a loss of 1.63 percent and the soy sauce manufacturer Kikkoman with a loss of 13 percent.

Meanwhile, the boom in artificial intelligence (AI) products continued to boost China's exports in October. Exports rose by 35.2 percent compared to the same month last year, as the customs authority announced on Tuesday. Economists polled by Reuters had expected an increase of 33.5 percent. Imports even increased by 41.6 percent. Analysts had only expected an increase of 32 percent. In September, exports rose by 36.3 percent and imports by 31 percent. This means that the country's trade surplus is heading towards over a trillion dollars for the second year in a row.