Asian Markets Diverge Amid AI Rally and Iran Tensions

Asian equity markets diverged on Wednesday, August 12, 2026, as a rally in semiconductor stocks clashed with geopolitical instability in the Middle East. The South Korean Kospi rose between 3.5% and 4%, driven by robust AI infrastructure demand. Samsung Electronics gained approximately 6% and SK Hynix rose nearly 4%, attracting roughly 900 billion won from foreign investors.

In contrast, Japan's Nikkei traded flat near 67,010. Investors remained cautious ahead of the U.S. Consumer Price Index release to gauge the Federal Reserve's potential rate hike timing. This hesitation was compounded by rising oil prices and Treasury yields, which pushed U.S. gasoline costs to an average of $4.01 per gallon.

Regional instability intensified as the Government of Iran rejected statements from President Donald Trump, who indicated he would demand compensation if Iran sought it during peace talks. The Strait of Hormuz remains closed following February attacks on Iran by the United States and Israel. Further tensions emerged in the Bab el-Mandeb strait, where Houthi rebels attacked a vessel, raising fears of renewed civil war in Yemen.