Retaliatory Surge! Microsoft and Amazon Earnings Rescue Markets: South Korean Stocks Soar 16% in Record Rally, Japanese Nikkei Jumps 3,400 Points

South Korean and Japanese stock markets staged a powerful rebound on Friday (31st), recovering from steep mid-week losses, driven by continued expansion plans from major tech companies that rekindled market confidence in artificial intelligence (AI) themes.

South Korea's Kospi index opened sharply higher, surging as much as 16%—its largest-ever intraday gain—recovering from a three-day plunge that had triggered circuit breakers halting algorithmic buying. Investor sentiment lifted MSCI Asia Pacific Index up 2%, marking its second consecutive day of gains.

Japan's Nikkei 225 index rose 5.5%, or 3,400 points, briefly reaching 65,290.84. The yen strengthened on Thursday amid suspected government intervention, and investors turned their focus to the Bank of Japan's (BOJ) policy decision due later on Friday.

On the individual stock front, South Korea's memory chip giants posted explosive gains. SK Hynix surged as much as 28%, buoyed by renewed optimism in AI prospects and further catalyzed by rare direct share purchases by SK Group Chairman Choi Tae-won. Samsung Electronics jumped 26% during trading. Japan's SoftBank Group rose 15%, hitting its daily trading limit.

U.S. tech stocks rallied strongly on Thursday. Microsoft's (MSFT-US) robust earnings reignited market optimism around AI spending, lifting the Nasdaq by 2.8%. After U.S. market close, Amazon's (AMZN-US) upbeat earnings report sent its after-hours share price soaring 9%, further fueling the tech sector's recovery momentum.

The Kospi had plunged 17% over the three trading days through Thursday, as investors worried about rapidly rising debt levels among global tech giants and intensifying semiconductor competition from China, leading to massive sell-offs in AI-related stocks.

While Korean equities had surged this year amid the AI boom, market volatility has visibly intensified since the launch of leveraged investment products in May. Shawn Oh, head of cash equities at NH Investment & Securities Korea, noted that recent AI tech stocks had faced accelerated selling pressure due to deleveraging, position reduction, forced liquidations, and liquidity factors—but suggested this pressure may now be stabilizing.

Investors were also buoyed by Chairman Choi's share purchase. He bought 3,620 shares of SK Hynix in the open market—the first time he has directly invested in the company under his personal name—spending approximately 4.8 billion Korean won (about $3.2 million). The market widely interpreted this move as a strong vote of confidence in SK Hynix's long-term prospects following the sharp price decline.