Asian shares rebound as Japan and South Korea recoup AI sell-off losses

Asian shares mostly gained, with South Korea’s KOSPI jumping 4.7% as Japan clawed back part of the losses from a sharp AI-stock sell-off. The rebound came after a stretch in which the Nikkei 225 had fallen nearly 5% and South Korea’s benchmark had dropped 6.4%, underscoring how closely both markets are tied to chipmakers and other AI-sensitive names.

The earlier slide hit hard because investors had spent months pushing AI-related shares higher, then pulled back abruptly as valuations, risk appetite and global uncertainty shifted. Selling in those names weighed on benchmarks in South Korea and Japan, where semiconductor makers and equipment suppliers carry outsized influence over daily index moves. A move like Tuesday’s does not erase that damage, but it does show that buyers are still willing to step back in after steep losses.

That is why the recovery matters beyond Seoul and Tokyo. When AI enthusiasm turns, global indexes can feel it fast because a relatively small group of technology and chip names has become powerful enough to steer broad market benchmarks. The question now is whether the sector’s latest drop was a temporary correction after an overheated run, or the first sign that investors are rotating away from the AI trade and demanding more realistic earnings support.

The rebound also followed a broader period of market strain. Asian and global shares had mostly declined on July 16, while oil prices slipped despite U.S.-Iran strikes, adding another layer of volatility to trading desks already focused on technology valuations. In a later session, Tokyo’s losses deepened as AI-linked selling intensified, and shares in Taiwan also fell more than 5%, showing how quickly the pressure spread across the region.

In Seoul, a Hana Bank dealing room displayed the dollar-won exchange rate on its screens as stocks recovered, a reminder that currency moves, geopolitical risk and the technology cycle are all feeding into the same trading backdrop. For now, the bounce in Japan and South Korea suggests the AI story is still driving market direction, but traders are no longer treating every dip as a simple buying opportunity.