TOKYO — Asian stock markets mostly recovered on Tuesday, July 21, 2026, after several days of losses, driven by a rebound in technology shares. This followed advances in US technology stocks on Monday, which were mirrored in Asian trading. Japan's Nikkei rose 1.75% and South Korea's KOSPI gained 3.6%.

However, concerns remain over the artificial intelligence (AI) sector, which has seen recent declines amid fears it may be overbought, particularly in chip stocks. Stephen Innes of SPI Asset Management noted the rebound lacked evidence of "a decisive improvement in the AI fundamentals." He added, "Big Tech earnings now need to prove that AI revenues, margins and cash flow can justify the scale" of the substantial investments in AI infrastructure. Tesla and Alphabet are scheduled to release earnings this week, with Microsoft, Meta, Apple, and Amazon following next week.

Oil prices had risen on Monday after renewed fighting over the weekend, during which the United States announced three new military fatalities and one service member missing in action. On Tuesday, Iran's Revolutionary Guards claimed to have struck US military targets, including air defense systems in Bahrain and Kuwait, according to state news agency IRNA.

Michael Wan of MUFG commented on the situation, stating, "In practice, we think even if there were disruptions it is unlikely to be sustained given the lack of capability right now by the Houthis to do so and also differentiate which are Saudi linked ships or not."

Meanwhile, yields on British gilts rose on Monday following remarks by new Prime Minister Andy Burnham regarding public finances, which unsettled bond investors.

Sources