Asia stocks rise as Japan, Korea rebound tracking Wall St gains

Asian stocks experienced a rebound on Monday, mirroring the gains seen on Wall Street following a weaker-than-anticipated U.S. jobs report. The Federal Reserve's potential for a near-term rate hike appeared less likely due to the unexpected job cuts in July and revised lower hiring in the previous two months. This led to a reduction in the odds of a September Fed rate hike to around 43% - 44%, down from roughly 64% - 67% a week prior.

Japan's Nikkei 225 climbed nearly 2%, while the broader TOPIX gained about 0.8%. In South Korea, the KOSPI rose approximately 0.4%, following an earlier surge beyond 2%. The rebound was fueled by a return to semiconductor stocks, with Kioxia rising about 0.5%, LARGAN Precision gaining nearly 1.7%, and TDK and Sony advancing more than 1% each.

South Korean gains followed a challenging week for Asian chip stocks as investors reevaluated the sustainability of the AI-driven rally and semiconductor sector valuations. Shanghai stocks were mixed, with the Shanghai Shenzhen CSI 300 down about 0.1% and the Shanghai Composite up roughly 0.5%. Within China's technology sector, Alibaba rose over 2%, while Foxconn Industrial Internet gained 1.7% and NAURA Technology surged over 1%. However, BOE Technology fell nearly 3%, and Cambricon Technologies dropped more than 5%.

Hong Kong's Hang Seng rose about 0.5%, while Australia's S&P/ASX 200 fell around 0.5%, erasing some of Friday's gains. Lithium stocks stood out, with European Lithium increasing nearly 6% and Global Lithium Resources gaining over 5%. Treasury Wine Estates surged more than 4%, reaching its highest level since December 9, 2025, after announcing a major restructuring of its U.S. operations to address excess supply.

India's Nifty 50 Futures fell about 0.3%, indicating a weaker start for Indian equities. Singapore's FTSE Straits Times Singapore was closed for the National Day public holiday. Oil prices strengthened as investors reassessed the chances of the Strait of Hormuz reopening. Iran mentioned a deal with Oman to define new shipping lanes, but maintained that the waterway would reopen only after additional U.S. conditions were met.

The rising fuel prices emphasize the focus on Wednesday's U.S. July consumer price report, which could influence expectations for a September Fed rate hike. Markets will also monitor a lighter U.S. earnings schedule this week, including results from Applied Materials, Cisco, and CoreWeave, for further insights into the AI investment cycle.