Japan and South Korea Stocks Revenge Surge: Kospi Jumps 7%, SK Hynix Surges Over 9%, Samsung, Kioxia and SoftBank Broad Short Squeeze

TradingKey - Japanese and South Korean stock markets staged a powerful rebound, with the KOSPI Index surging nearly 7% and the Nikkei 225 steadily recovering, while SK Hynix jumped over 9%, and Samsung Electronics, Kioxia, and SoftBank followed suit.

During the Asian session on July 15, after experiencing intense volatility and a market shakeout over the previous two days, Japanese and South Korean stock markets both gapped sharply higher. The KOSPI Index jumped 6.98% at the open, reclaiming the 7,000-point mark to temporarily trade at 7,335.47 points; Samsung Electronics rose 5.89% to temporarily trade at 278,500 KRW; SK Hynix surged 9.41%, returning to the 2 million mark and temporarily trading at 2,093,000 KRW.

KOSPI Index Chart, Source: TradingView

Compared to the wild swings in South Korean stocks, the Japanese stock market also showed a steady upward recovery trend in early trading today, with the Nikkei 225 Index rising 1.36% to temporarily trade at 68,665.89 points; Kioxia rose 7.15% to temporarily trade at 74,040 JPY; SoftBank rose 0.33% to temporarily trade at 6,596 JPY.

The latest U.S. June CPI data released showed year-on-year growth slowing to 3.5%, lower than market expectations, which significantly eased market fears of an "ultra-hawkish rate hike" by the Federal Reserve. This, in turn, boosted sentiment across Asia-Pacific markets in early trading, while also indicating that the market had been severely oversold technically in the previous period. Long-term institutional funds and capital previously shaken out of the market are accelerating reallocation now that the negative news has run its course.

However, whether this rebound can translate into a medium- to long-term reversal still depends on the two ultimate macro shoes about to drop in quick succession today: ASML ( ASML) second-quarter earnings report and Fed Chairman Warsh's congressional hearing.