Korea, Japan and Taiwan Stocks Hit Record Highs as AI, Chip Rally Prevails Over Geopolitical Risk

"AI optimism is winning the tug-of-war with geopolitical risk"

Brent crude rises to $107 despite Iran's new proposal for talks

South Korean, Japanese and Taiwanese stocks extended their record run on April 27 as U.S.-Iran negotiations to end the war remained deadlocked. Gains in artificial intelligence and semiconductor shares, along with hopes for easing tensions in the Middle East, drove the advance. Analysts said AI optimism is outweighing geopolitical risk.

Brent crude, the global oil benchmark, for June delivery traded up 2.4% at $107.87 a barrel as of 10:55 a.m. GMT. West Texas Intermediate rose 2.1% to $96.43 a barrel.

Asia-Pacific equities rose broadly despite higher oil prices. South Korea's Kospi climbed 2.13% to a record 6,615.03. Japan's Nikkei 225 added 1.38% to 60,537.36, closing above 60,000 for the first time.

In South Korea, semiconductor heavyweights Samsung Electronics and SK Hynix led gains on AI optimism.

In Japan, Fanuc surged on its push into physical AI, while semiconductor and AI-related shares including Advantest and Tokyo Electron also advanced. In Taiwan, the benchmark index closed up 1.7% at 39,616.63, helped by TSMC shares rising to a record high. In China, the Shanghai Composite edged up 0.16%, while Hong Kong's Hang Seng Index slipped 0.2%.

U.S. stock futures were relatively steady, hovering around levels seen late last week when Wall Street indexes reached fresh records.

In bond markets, the 10-year Treasury yield rose 1 basis point to 4.316%. The two-year Treasury yield was also up 1 basis point at 3.789%. Japan's 10-year government bond yield climbed about 2 basis points to 2.463%.

Axios reported on April 27 that Iran had presented the U.S. with a new proposal to reopen the Strait of Hormuz, end the war and postpone nuclear talks until later.

Earlier, President Donald Trump canceled plans to send special envoy Steve Witkoff and economic and industry adviser Jared Kushner to Islamabad on Saturday, citing what he called "tremendous infighting and confusion" within Iran's leadership.

Still, efforts to reach a deal appeared to be continuing. Iranian Foreign Minister Abbas Araghchi made a brief visit to Islamabad on Sunday. Pakistani leaders are urging Tehran and Washington to resume talks, though Trump said negotiations could also take place by phone.

"The fat-tail risk of an extreme event is not over yet," Billy Leung, an investment strategist at Global X ETFs, said.

Stock markets have so far shown striking resilience. Global equities have recouped losses from the initial outbreak of the war and remain near record highs despite the energy shock.

The move reflects a contest between geopolitical risks and powerful structural drivers, especially AI.

"The stock market is essentially balancing two opposing forces — geopolitics on one side and AI commercialization on the other — and for now, expectations for AI commercialization are overwhelmingly dominant," Leung added.

Some investors are concerned those expectations have become overstretched.

"The main trend is still upward, but investor sentiment is overheated, positioning is crowded, and history shows elevated valuation multiples often lead to weaker future returns," he said.

Others see the volatility as a buying opportunity. Rajat Bhattacharya, chief investment strategist at Standard Chartered, said short-term market swings are likely, but a deal that could revive inflows may be reached within weeks.

"Short-term volatility gives investors a chance to add risk assets within a diversified portfolio," he said.

Historical precedent suggests markets can recover quickly from supply shocks. Ed Yardeni, president of Yardeni Research, said oil prices doubled and stocks fell during the 1956 Suez Canal crisis, but equities climbed back to fresh highs after the waterway reopened.

Kim Jeong-a, guest reporter at Hankyung.com, kja@hankyung.com