Asian markets bounce back as tech optimism, geopolitical tensions ease

Stock markets across Asia rebounded on Monday, with MSCI's broadest gauge of Asia-Pacific shares excluding Japan climbing 0.8% to recover from a sharp 4.6% decline in the previous week. The rebound reflected easing concerns over AI sector valuations and diminishing geopolitical jitters that had weighed on sentiment in recent trading sessions.

Regional performances were mixed but mostly positive. Japan's Nikkei index surged 2.5%, while Korean equities posted modest gains, suggesting a cautious return of investor appetite across major Asian bourses. The recovery came as traders reassessed positions following last week's volatility.

The US dollar firmed against regional currencies as markets factored in expectations around Federal Reserve policy decisions. The stronger greenback typically impacts Asian exporters and emerging market valuations, though the modest currency movement suggested investors were taking a measured approach.

Market participants remained watchful of geopolitical developments in West Asia and ongoing shifts in technology stocks, which have dominated trading patterns in recent weeks. Analysts noted that the recent volatility had created some stabilization as extreme positioning unwound, though broader macroeconomic headwinds and interest rate expectations continue to influence investment strategies across the region.