Asia-Pacific Stocks Close: Market Wait-and-See Sentiment High Ahead of US-China Leaders’ Meeting

Tradingkey - With the upcoming meeting between the heads of state of China and the U.S. and the imminent release of U.S. CPI data, market sentiment remains cautious. Asia-Pacific stock markets saw mixed performance, with Japanese and Taiwanese stocks edging higher, while South Korean stocks paused their rally to close down 2.29%.

The Nikkei 225 Index closed up 0.52% at 62,742.57 points. During the session, it hit a high of 63,218.51 and a low of 52,158.43, continuing to hover at elevated levels.

Among heavyweight stocks, SoftBank rose 4.35%, Mitsubishi Corp. gained 4.34%, and Sony increased by 2.55%. On the downside, Fast Retailing fell 3.76% and Keyence dropped 2.48%. By sector, non-ferrous metals, insurance, and banking led the gains, while retail and food industries were among the top decliners.

Regarding news, the Bank of Japan released the minutes of its April monetary policy meeting, showing a significantly more hawkish stance compared to the previous meeting. The policy board generally expressed concern that oil price shocks from the Middle East situation could drive up import costs and increase inflationary pressures on businesses and households. Core CPI is expected to return to the 2% target around the second half of 2026 to 2027. Meanwhile, some members suggested that the central bank should accelerate the pace of interest rate hikes if upside risks to prices continue to rise.

Near the close, the yen surged briefly, gaining nearly 100 pips. USD/JPY plummeted by nearly 100 points in the short term, hitting a low of 156.77 before trading at 157.38. Japanese Finance Minister Satsuki Katayama confirmed that her team is coordinating closely with U.S. Treasury Secretary Scott Bessent on exchange rate policy, suggesting U.S. tacit approval of Japan's recent suspected market interventions.

The KOSPI fell 2.29% to close at 7,643.15 points. After touching the 8,000-point mark in early trading, it plunged over 5% to a low of 7,421.71. Among heavyweight stocks, SK Hynix fell 4.63% and Samsung Electronics dropped 1.4%.

Kim Yong-beom, Chief of Staff for Policy at the South Korean Presidential Office, proposed in a social media post today that a "national dividend" system should be considered to return excess profits generated in the era of artificial intelligence (AI) infrastructure to society.

He stated, "South Korea is now facing a rare historical opportunity." He reiterated the necessity of considering a national dividend, adding, "Then South Korea will be the first country to not only provide AI infrastructure but also return the excess profits brought by AI to humanity."

The Taiwan Weighted Index rose 0.26% to close at 41,898.32 points. TSMC closed up 2.01% at NT$2,280.

A recent Morgan Stanley report noted that hedge fund inflows into South Korea, Japan, and Taiwan came from "clients across various regions and strategies." The total purchase volume for the week ending May 7 hit its highest level in over a decade, though specific figures were not provided.

Global investors are racing to position themselves in Asian tech companies, seeking assets that benefit from the AI theme. Taiwan, Japan, and South Korea have become critical regions for semiconductor and hardware investments. Asia's three largest companies by market capitalization are all chipmakers—TSMC, Samsung Electronics, and SK Hynix—whose recent record earnings underscore their pivotal role in the global AI supply chain.

Morgan Stanley stated that last week's buying was concentrated in semiconductors and hardware. Net positions held by hedge funds in Japan, South Korea, and Taiwan have reached their highest level since Morgan Stanley's prime brokerage team began tracking them in 2010, now accounting for approximately 19% of global holdings.