Asia Markets Rally as AI Stocks Bounce Back, Yen Holds Steady After Intervention

Asian markets experienced a significant rally on Friday as South Korea's benchmark KOSPI surged by 17%, reversing steep losses from earlier in the week. Japan's Nikkei advanced nearly 4% and MSCI's broadest index of Asia-Pacific shares outside Japan rose 6%. This rebound came after AI heavyweights Microsoft and Amazon reported upbeat earnings and forecasts, easing concerns over hefty capital spending.

Market analyst Fabien Yip noted that the AI demand story 'didn't really decelerate,' with sustainable growth still expected. However, despite Friday's turnaround, South Korea's KOSPI is set to lose more than 22% in July, its largest monthly loss since 2008.

The yen held some distance away from a 40-year trough after suspected coordinated intervention by various authorities in the previous session. The Bank of Japan (BOJ) kept rates on hold on Friday, with focus now on BOJ Governor Kazuo Ueda's press conference later in the day.