Asian stocks flat after tech selloff

South Korean stocks were the best performers for the day, recovering some ground from a nearly 10% slump in the prior session

Asian stocks traded kept to a tight range on Wednesday as investors weighed easing tensions in the Middle East against lingering concerns over technology valuations following a sharp worldwide selloff in AI-linked shares.

South Korean stocks were the best performers for the day, recovering some ground from a nearly 10% slump in the prior session. But lingering worries over stretched tech valuations limited overall gains.

KOSPI climbed 2.2% in volatile trade, recovering part of Tuesday’s 10% slump, its sharpest one-day decline since March, as investors returned to beaten-down technology and semiconductor stocks.

The rebound came after a brutal selloff in AI-linked shares worldwide rattled markets in the previous session, amid questions over lofty AI-fuelled valuations and long-term returns from the fast-growing sector.

Investors also turned skittish towards South Korean markets after the MSCI declined to consider reclassifying the country as a developed market, citing continued accessibility headwinds, especially in foreign exchange.

Nikkei 225 swung between gains and losses before trading down 0.8%, while the broader TOPIX dropped 0.4%.

Hawkish signals from a summary of opinions from the Bank of Japan’s June policy meeting also weighed. Some BOJ policymakers were seen favouring additional interest-rate increases following the central bank’s decision to raise rates to 1.0% last week.

ASX 200 gained 0.2% after consumer price index inflation data showed headline inflation eased in May from the prior month.

But underlying inflation grew from the prior month and remained well above the Reserve Bank’s 2% to 3% annual target.

The rise in underlying inflation– as represented by trimmed mean CPI– is likely to keep the RBA leaning hawkish in the coming months. The central bank hiked interest rates by a cumulative 75 basis points in 2026, as it moved to quash a late-2025 resurgence in inflation.

But the RBA signalled a pause during its June meeting, stating that it was now waiting to observe the effects of its rate hikes on the economy.

Among broader Asian markets, Chinese stocks were subdued, with the Shanghai Shenzhen CSI 300 little changed, while the Shanghai Composite slid 0.4% and Hang Seng index was flat.