AI chip rally powers global markets despite Middle East tensions

The markets woke up on Friday morning to a familiar rhythm: geopolitical tension in the Middle East, fresh attacks between the US and Iran, and the fragile three-week ceasefire crumbling. But the traders and fund managers watching the screens had their eyes elsewhere. In Seoul, South Korea's KOSPI index climbed 2.5 percent. In Tokyo, the Nikkei rose 1.2 percent. The reason was simple and singular: SK Hynix, the South Korean chip giant, was making its American debut, and investors were hungry for it.

The company had priced its American Depositary Receipts at $149 per share on Thursday, raising approximately $26.5 billion—a sum that would make this the world's second-largest initial public offering on record, trailing only SpaceX's listing in June. The money would flow into new factories and equipment, all built to feed the relentless demand for artificial intelligence chips. The message was clear: the world wanted exposure to the AI supply chain, and it was willing to pay for it.

What struck observers most was not the size of the offering but what it revealed about market priorities. Justin Onuekwusi, chief investment officer at St James's Place, put it bluntly: the concentration of money and momentum flowing into chipmakers and anything touching artificial intelligence had created a distortion in markets unlike anything in his career. Macroeconomic headwinds—geopolitical risk, the specter of stagflation—had become almost irrelevant. The Middle East could burn; the markets would still climb if the chips were good.

The numbers told the story. SK Hynix's South Korean shares had more than tripled in value over the course of 2025, lifting the broader KOSPI to record highs and making it the world's best-performing major stock market since the year began. On Wednesday, just two days before the US listing, the index had plummeted five percent in a single session, dipping into bear territory. By Friday, it had recovered and then some. The Philadelphia Semiconductor Index, a barometer of the sector's health, had jumped three percent. Micron Technology's announcement of more than $250 billion in planned US investment through 2035 had turbocharged the rally.

Europe, by contrast, moved with caution. The pan-European STOXX 600 edged up just 0.1 percent on Friday, putting the continent on track for a weekly loss that would snap a four-week winning streak. The Nasdaq, heavy with technology stocks, closed sharply higher. Oil prices, meanwhile, had climbed five percent for the week—the strongest weekly performance since early May—as the renewed Middle East tensions reminded traders that supply disruptions remained a real possibility. Brent crude futures settled at $75.42 per barrel, having surrendered most of the gains it had captured when the conflict reignited at the end of February.

In Japan, a different current was moving through the markets. Finance Minister Satsuki Katayama announced on Friday that the government wanted to explore ways to encourage pension funds, including the massive Government Pension Investment Fund, to increase their holdings of domestic financial assets. The statement sent the bond market and the yen higher. The currency firmed 0.5 percent to 161.61 per US dollar, a meaningful move for a currency that had been hovering near its lowest level in four decades. Traders had been watching for any sign of official intervention from Tokyo to prop up the weakening yen; Katayama's comments suggested that repatriation of Japanese capital might be coming instead.

Nick Twidale, chief market strategist at ATFX Global in Sydney, captured the mood with a mixture of bemusement and resignation. The Middle East updates looked bad, he said, but investors seemed remarkably resilient to those risks at the moment. Technology was driving markets higher, and nothing else seemed to matter much. Sam Konrad, an investment manager for Asia Equity Income at Jupiter Asset Management, suggested that SK Hynix's US listing could trade at a premium to its local shares, potentially helping to re-rate the South Korean-listed stock even higher. The dollar, for its part, remained mostly muted as traders waited for clearer signals about the path of US interest rates.

What had emerged was a market bifurcated by conviction: one part of the world was betting everything on artificial intelligence and the chips that would power it, while another part—Europe, the Middle East, the currency markets—moved with uncertainty and restraint. The question hanging over the close of the week was whether that conviction could hold if the geopolitical temperature rose further, or if the concentration of capital in a single narrative would eventually prove fragile.