KOSPI, Nikkei Diverge as AI Stocks Split Ahead of Fed, BOJ

Seoul’s KOSPI slipped on Tuesday as semiconductor shares continued to weigh on the index, while Tokyo’s Nikkei 225 climbed after a strong rebound in SoftBank Group, leaving the region’s two most AI-sensitive markets headed in opposite directions ahead of U.S. and Japanese rate decisions.

The KOSPI fell as much as 0.76% in early trade before paring most losses, extending pressure after a steep technology sell-off the previous session. The Nikkei 225 rose about 0.8% later in the day as SoftBank jumped more than 8%, giving the price-weighted index an outsized boost and helping some Japanese technology stocks recover ground.

South Korea’s market is heavily weighted toward memory-chip makers. Samsung Electronics declined in early trade and SK Hynix traded near the flat line. Foreign investors were net sellers for a fifth straight session, adding downward pressure. Kiwoom Securities analyst Han Ji-young noted that some of the overnight weakness in U.S. chip stocks had already been reflected in Monday’s Korean sell-off, which could allow for partial recovery as investors reassess valuations.

In Japan, gains were concentrated in a handful of large names. Chip supplier Kioxia advanced after recent losses. The yen traded around 154.6 per dollar and Japan’s 10-year government bond yield hovered near 3% as markets prepared for the Bank of Japan’s policy decision on Friday. The BOJ is widely expected to raise its policy rate by 25 basis points to 1.25%; market attention is likely to focus on guidance about the pace of any further tightening.

Broader regional gauges were mixed. MSCI’s Asia-Pacific index excluding Japan was largely unchanged, while Australia’s S&P/ASX 200 and Hong Kong’s Hang Seng traded lower. Brent crude was near $107 a barrel and U.S. crude stood above $102 after renewed attacks on Saudi infrastructure raised supply concerns. The U.S. 10-year Treasury yield briefly touched 5%.

Traders priced about a 90% chance of a 25 basis-point Federal Reserve increase on Wednesday, which would be the first U.S. policy rate rise in roughly three years. JPMorgan strategist Mislav Matejka argued a measured Fed hike need not derail equities if earnings remain strong, but he highlighted the combined pressures of higher energy prices, elevated yields and uncertainty around AI spending.

Investors are watching the Fed decision on Wednesday and the BOJ decision on Friday for signals on the likely path of interest rates and their potential effects on equity valuations, corporate margins and currency levels.