Hang Seng Tech Index surges 3% as Asian tech stocks rebound from selloff

The Hang Seng Tech Index jumped 3% to 4,531.62 on Wednesday, leading a broader Asian tech rebound after two days of heavy selling triggered by rate-hike fears and AI valuation concerns.

"The selloff in AI-related names was overdone relative to the underlying demand trajectory, and dip-buyers are stepping in across the region," said Gary Ng, senior economist at Natixis.

The recovery followed a brutal session Tuesday that saw South Korea's Kospi sink 10% and the Nasdaq Composite fall 2.2%, as worries about higher-for-longer interest rates and stretched AI valuations triggered a broad tech rout. Micron Technology slumped 13.2% and Nvidia fell 4.1% in New York, while Samsung Electronics tumbled 12.3% in Seoul. The Shanghai Composite added 1.78% to 4,163 in Wednesday's session, tracking the regional rebound.

The bounce highlights the market's continued conviction in AI-driven demand despite macro headwinds, with investors now focused on Micron's quarterly results due after the US close Wednesday for the next catalyst on semiconductor spending.

The broader Hang Seng Index also advanced, though at a more modest pace than its tech-heavy counterpart. The rebound was broad-based across Asian markets, with South Korea's Kospi recouping some of its record 10% plunge from the prior session as Samsung Electronics and SK Hynix attracted dip buyers. Japan's Nikkei 225 rose 1.55% to 72,354, while Australia's S&P/ASX 200 added 0.42% to 35,002.

The selloff earlier this week was fueled by growing expectations that the Federal Reserve could raise interest rates at least once before year-end, with CME data showing an 85% probability of a hike, up from 60% a week earlier. Higher rates threaten to dampen the massive capital spending plans that have underpinned the AI boom, with companies like SpaceX announcing a $20 billion bond offering partly to fund AI development.

The US 10-year Treasury yield held above 4.50% on Wednesday, while the two-year yield climbed to 4.23%, its highest since February 2025, as persistent inflation concerns tied to tariffs and elevated energy costs followed the US-Iran conflict. The US dollar index remained firm, keeping pressure on emerging-market currencies.

The rebound in tech stocks comes as major technology companies continue to pour capital into AI infrastructure. SpaceX's $20 billion bond sale, disclosed this week, and Alphabet's 5% decline Tuesday after key AI talent defections to OpenAI and Anthropic highlight the intense competition for AI talent and computing resources. SK Hynix, which recently overtook Samsung as South Korea's most valuable company on the strength of its high-bandwidth memory chips, was among the biggest gainers in Wednesday's regional rebound.

Traders will watch for the Federal Reserve's preferred inflation gauge, the core PCE price index, due Thursday, which is expected to show inflation accelerated to 4.1% in May. A hot reading could reinforce the case for a rate hike and reignite the tech selloff.

This article is for informational purposes only and does not constitute investment advice.