Asia-Pacific stock markets advanced on Tuesday, led by Japan and South Korea where the artificial intelligence hardware supply chain is concentrated, with South Korea's KOSPI climbing 5% at the open.

The Korea Exchange triggered the SIDECAR mechanism, halting program buying on the KOSPI. The Nikkei 225 rose 2.4%, benefiting from a strong rebound in US chip stocks. These three markets together host the major global hardware suppliers for AI infrastructure buildout and are highly sensitive to movements in the US technology sector.

Chip giants Samsung Electronics Co Ltd (KRX: 005930) and SK hynix Inc. (KRX: 000660) led the gains, with Samsung Electronics and SK hynix rising 5.32% and 7.66% respectively as of press time.

US stocks rebounded sharply on Monday, as a strong recovery in technology shares combined with a steep drop in oil prices pushed the S&P 500 to its largest single-day gain in seven months. The S&P 500 rose 2.3% on Monday, the Nasdaq 100 climbed 3.4%, and the semiconductor stock index surged nearly 7% in a single session. Meanwhile, Brent crude fell nearly 6% to close below $93 per barrel, with the decline in energy prices helping to ease market concerns about inflation. Although NVIDIA Corp (NASDAQ: NVDA) dropped 4.3% due to an investigation involving its CEO Jensen Huang, the broader technology sector still closed strongly higher.

This rebound followed a period of severe market turbulence. Last week, concerns that the US congressional election results could lead to stricter regulation of the AI industry triggered a large-scale selloff in chip stocks. Many market participants believe this rebound shows investors have not abandoned the AI trade thesis, and that last week's selling was more of a position adjustment than a trend reversal.

The market is now awaiting US October consumer price data due on Tuesday. Expectations suggest the reading will show a smaller increase than in September, and if confirmed, it would further support market sentiment.

On the corporate front, Anthropic could launch the formal roadshow for its closely watched IPO as early as Tuesday, making its case to investors about the appropriateness of the current listing timing. Alphabet Inc (NASDAQ: GOOGL), Google's parent company, is rolling out a broader lineup of AI chip products, accelerating its challenge to NVIDIA Corp's (NASDAQ: NVDA) position in a market worth hundreds of billions of dollars.

Oil price decline and easing geopolitical tensions support sentiment

Brent crude plunged nearly 6% on Monday, falling below $93 per barrel. After meeting with Qatari Prime Minister Mohammed bin Abdulrahman Al Thani, Trump said the Iran war situation is moving toward an end, and expectations of a de-escalation in Middle East tensions further pushed oil prices lower.

Falling energy costs help curb inflationary pressure. Measured by the breakeven rate on US inflation-protected Treasuries, market expectations for future inflation have declined in tandem with oil prices this month. Nevertheless, US Treasury yields edged higher on Monday, as the stock market rally diminished the safe-haven appeal of bonds. The Bloomberg Dollar Spot Index fell 0.5% on Monday, its first decline in three trading sessions.

No structural reversal in the AI investment cycle

Several market participants shared their views on this rebound, with the overall inclination being that market fundamentals remain supported.

Brock Weimer of Edward Jones said:

"We continue to believe the economic environment supports corporate fundamentals, and therefore recommend investors maintain an overweight position in equities relative to fixed income."

Ulrike Hoffmann-Burchardi, Chief Investment Officer at UBS, noted that the recent tech selloff represented a position reset rather than the beginning of a structural downturn in the AI investment cycle, though the rebound has not eliminated the risks posed by concentrated positioning and high market expectations.

Chris Larkin of Morgan Stanley E*Trade则认为, last week's volatility reflected more of a position adjustment within the AI trade rather than investors abandoning it entirely. "There are good reasons to believe the stock market's long-term uptrend remains intact, especially given that economic data was broadly strong during last week's selloff," he added.