MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.4% to hit a record high

Asian stocks climbed on Monday with AI-linked themes in focus at the start of the first full trading week of the year, while oil prices dipped.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.4% to hit a record high, while S&P 500 e-mini futures were 0.2% higher as investors looked through the geopolitical developments ahead of a packed week of economic data releases.

Asia’s immediate market reaction has been muted, with investors largely brushing off the weekend’s developments, said David Chao, global market strategist for Asia-Pacific at Invesco in Singapore. In North Asia, the focus remains firmly on the structural tailwind from rising AI investment, outweighing geopolitical concerns.

The Nikkei 225 soared more than 3.3% to near a record high reached two months ago, as markets reopened for the first trading day after New Year. Japanese stocks extended gains as data showed manufacturing activity stabilised in December, ending a five-month streak of deterioration.

Kospi and Taiwan climbed more than 3% apiece to hit fresh record highs.

The AI investment surge, especially from the United States, has been a boon for top-line GDP growth in Taiwan and to a lesser extent Korea, analysts from Goldman Sachs wrote in a research note. Between 5-10 cents of every U.S. AI investment dollar ends up in Taiwan. Much of the rest finds its way to Asia, with TSMC the single biggest supplier.

Markets in China were more muted, with the Hang Seng Index trading flat, dragged down by Chinese oil companies as a gauge of Hong Kong-listed energy stocks fell 3%. Australian shares were unchanged, with gains in major miners offsetting declines in the top energy stocks.