Asia-Pacific Markets Rebound After AI-Driven Selloff

Asia-Pacific Markets Rebound After AI-Driven Selloff

Asia-Pacific stock markets rebounded strongly on Monday, November 10, 2025, following a sharp AI-fueled selloff the previous week. The recovery was driven by renewed investor optimism due to signs of a potential resolution to the ongoing U.S. government shutdown and a broader reassessment of AI sector valuations.

Market Performance and Recovery

Following last week’s AI-driven rout, key indices across Asia-Pacific posted notable gains:

• Japan’s Nikkei 225 surged 1.26% to 50,911.76.
• South Korea’s KOSPI rose by around 2%.
• Other markets such as Taiwan, Singapore, and India also advanced sharply.

China’s markets demonstrated resilience despite weaker-than-expected third-quarter earnings, a 1% year-on-year drop in exports for October, and subdued manufacturing PMIs. The Shanghai Composite and CSI indices held steady even as regional sentiment was mixed. Meanwhile, India’s markets showed modest positive surprises in its October PMIs and earnings, contributing to investor confidence shifting somewhat from China toward India.

The recovery was further supported by U.S. futures gains in the Nasdaq and S&P 500, as Senate talks advanced toward ending the longest government shutdown in U.S. history, now lasting 40 days. This development restored some investor confidence, helping lift Asian markets amid global risk appetite improvement.

Causes of the Previous AI-Fueled Selloff

Last week’s market turmoil was largely attributed to an AI-fueled rout, where investors sharply reassessed valuations in AI-related technology stocks. The selloff was described as a correction in high beta sectors, particularly in Korea, Taiwan, and Japan, which had seen outsized gains earlier in the year driven by AI enthusiasm.

Despite recent positive revisions to earnings estimates in many Asian markets, the selloff reflected concerns about overvaluation and profit-taking after a strong 2025 run. Asian equity benchmarks including MSCI Asia ex-Japan rose 28% year-to-date before the correction, markedly outperforming the S&P 500’s 15% gain.

Underlying Economic and Market Factors

The current environment remains complex, shaped by a mix of macroeconomic signals and geopolitical factors:

• U.S. Government Shutdown: The shutdown has weighed on global markets through uncertainty and reduced confidence. The positive signs of a deal to end the shutdown have helped restore liquidity and market sentiment.

• Divergence in Asian Markets: While Korea, Taiwan, and Japan suffered more significant declines last week, China, India, and Singapore outperformed. This divergence is influenced by differing economic fundamentals, stimulus expectations, and earnings trajectories.

• Earnings and Economic Data: Q3 earnings in Asia have been mixed but generally supportive, with Korea and Taiwan seeing upward revisions. India’s economic indicators surprised modestly to the upside, whereas China’s export data and PMIs were weaker than expected.

• Currency and Bond Market Movements: The dollar has partially recovered against the yen and other currencies amid the Fed’s cautious stance on rate cuts. U.S. Treasury yields edged higher, reflecting ongoing concerns about inflation and economic growth.

Outlook and Investor Implications

Eastspring Investments’ Chief Investment Officer Vis Nayar and Chief Economist Ray Farris highlight that the recent correction—while unsettling—creates buying opportunities in Asia’s equity markets. Their analysis suggests Asian assets, particularly outside Japan, are likely to continue outperforming U.S. assets in 2026, offering valuable diversification benefits given the historically high valuations in U.S. markets.

Investor focus is expected to include:

• Monitoring China for clearer guidance on stimulus measures, which could reignite momentum there.
• Watching India’s steady economic performance and earnings growth as a potential alternative growth engine.
• Assessing the global tech sector’s valuation and the sustainability of AI-driven market enthusiasm.
• Tracking developments in U.S. political resolution and monetary policy for broader market direction.

Visual Summary

Images relevant to this story would include:

• Asia-Pacific stock exchange trading floors or market screens showing indices like Nikkei 225, KOSPI, and Shanghai Composite.
• Graphs illustrating last week’s AI-fueled selloff and Monday’s recovery rally in key Asian markets.
• Portraits or logos of major Asian stock exchanges or leading AI tech companies affected.
• Visuals of U.S. Capitol or Senate depicting the ongoing government shutdown negotiations impacting global markets.

The strong rebound in Asia-Pacific markets after last week’s AI-driven selloff demonstrates the region’s resilience and the critical influence of geopolitical and macroeconomic factors on investor sentiment. While uncertainties remain, the prevailing view among market analysts is cautiously optimistic, with Asian equities positioned to offer growth and diversification benefits in the evolving global landscape.