Taiwan's Taiex jumped 5.6% on Monday, led by TSMC, also up 5.6%, after the index's steepest weekly fall in two decades. Japan's Nikkei 225 rose 3.4% to 59,411, with Tokyo Electron up 6.5% and Advantest 5.1%.
After a week when chip stocks were sold as if the AI boom were ending, Asia just bought them back hard. The question for traders is how much of that is conviction, and how much is relief.
A rebound that started on Wall Street
The move followed Friday's recovery in New York, where the Nasdaq rose 1.1% and Nvidia gained 2.8% after falling 9.3% on Thursday. Thursday's sell-off had wiped out about $2.5 trillion of US market value on fears that the midterm results would slow data-centre construction. It spread to Asia on Friday, when the Kospi fell about 9% and the Nikkei about 6%.
Monday's gains won back only part of that. The Kospi rose 1.5%, with SK Hynix up 3.9% and Samsung Electronics 2.7%, well short of Friday's loss. MSCI's Asia-Pacific index outside Japan rose 0.8%, after falling 4.6% last week. And not every AI name joined in: SoftBank, one of Tokyo's biggest AI investors, fell 2.9%. This was a rally in the companies that make chips, not in everything with an AI story.
Why traders aren't calling the bottom yet
Investors were heavily underweight going into Monday. Deutsche Bank said last week that positioning had fallen to its 20th percentile, so part of this bounce is funds buying back what they sold. That can move prices fast, but it fades once the buying is done.
The bigger test comes Tuesday. Futures put the chance of a December Fed hike near 80%, up from about 73% on Friday. A hot October CPI would hit the same tech stocks that rallied today.
For anyone holding chip stocks or a tech fund, that makes this week unusually binary. The rebound shows how quickly money comes back when sellers run out. Tuesday shows whether it stays.
The risk: the bounce runs into the Fed
Rates are the next headwind. A higher-than-expected inflation reading would lift yields and pressure richly valued chip stocks.
The Nvidia probe isn't priced yet. US stocks haven't opened since the weekend news, and Nvidia's moves usually set the tone for Asian chipmakers.
Korea lagged. The Kospi recovered only a small part of Friday's fall, a sign that not all investors are buying back in.
What would confirm the turn
Two things, in order: a calm CPI on Tuesday, and AI earnings this week that show spending is holding. CoreWeave reports Tuesday, and Applied Materials and Cisco on Thursday. If those hold up and TSMC keeps today's gain, the sell-off will look like a scare.
Asia made the first move. Tuesday's inflation data decides whether anyone follows.
Sources: AP via ClickOnDetroit (9 Nov); Al Jazeera (9 Nov); HDFC Sky (9 Nov), citing Reuters; Investing.com via Yahoo Finance (8 Nov); Investing.com (7 Nov), citing Deutsche Bank.