South Korea's KOSPI Surges 14% in Broad Asian Rally; Bank of Japan Holds Rates

Asian equities rose sharply on Friday, led by a dramatic rebound in South Korea's KOSPI index, as strong earnings from U.S. technology giants renewed investor confidence in the artificial intelligence sector. The positive sentiment was further supported by the Bank of Japan's decision to hold its monetary policy steady.

KOSPI Rebounds on Tech Strength

South Korea’s KOSPI index surged more than 14%, recovering from what the source material described as its steepest weekly selloff in decades. The rally was fueled by heavyweight chipmakers, including Samsung Electronics (KS:005930) and SK Hynix (KS:000660).

The gains followed a strong session on Wall Street, where upbeat quarterly results from Microsoft and Amazon bolstered optimism about sustained AI-related investment. Despite the day's sharp rise, the KOSPI was reportedly on track for a 25% monthly decline amid recent profit-taking and concerns over valuations.

Bank of Japan Maintains Policy

The Bank of Japan (BOJ) kept its short-term policy rate unchanged at 1.0% in an 8-1 vote, as policymakers judged the economy was maintaining a moderate growth path. The dissenting board member, Hajime Takata, voted for an increase to 1.25%, citing upside risks to inflation.

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The central bank acknowledged that inflation risks are skewed to the upside and said it would monitor the impact of foreign exchange moves and global AI demand. The decision helped lift Japan's Nikkei 225, which climbed nearly 4%, supported by gains in semiconductor-related stocks.

Mixed Signals from China

Chinese markets posted modest gains, though economic data highlighted persistent headwinds. The Shanghai Composite index rose 0.6% and the blue-chip CSI 300 added 1%. In Hong Kong, the Hang Seng index edged 0.2% lower, although its tech sub-index gained 1.5%.

Data released Friday showed that China's manufacturing activity unexpectedly contracted in July, according to the official Purchasing Managers' Index (PMI). The non-manufacturing PMI also weakened, signaling ongoing challenges for the world's second-largest economy.