Asian markets closed Wednesday, February 4, 2026, with a generally positive tone as investors continued to build on the sharp rebound seen earlier in the week. While momentum moderated compared with Tuesday’s surge, buying interest remained intact across much of the region, particularly in North Asia. The session reflected a market transitioning from panic-driven selling to a more balanced reassessment of risk and valuations.

Gains were broad but uneven, with South Korea once again leading, China maintaining a steady recovery, and Australia benefiting from improved risk appetite. Japan stood out as a relative laggard, as investors opted to lock in profits after recent outsized gains.

South Korea Maintains Leadership as Momentum Builds

South Korea continued to outperform regional peers, with the KOSPI Composite Index rising 1.57% to 5,371.10. The advance extended the market’s powerful recovery following Monday’s sell-off and highlighted sustained confidence in technology and export-driven sectors. Semiconductor and industrial stocks remained in focus as investors reinforced positions built during the recent correction.

The steady follow-through suggested that Tuesday’s surge was not merely a technical bounce, but part of a broader re-engagement with Korean equities. Market participants appeared comfortable adding exposure, supported by improving global sentiment and stabilizing financial conditions.

China and Australia Advance as Risk Appetite Holds

China’s SSE Composite Index climbed 0.85% to 4,102.20, continuing its recovery after recent volatility. Financials and infrastructure-linked stocks led the gains, reflecting ongoing expectations of policy stability and supportive liquidity conditions. While the pace of the advance remained measured, the consistency of gains pointed to a rebuilding of investor confidence in mainland equities.

Australia also posted a solid performance, with the S&P/ASX 200 rising 0.80% to 8,927.80. Resource and financial stocks supported the move, aided by strength in the Australian Dollar Index, which jumped 0.99%. The stronger currency reflected improved global risk appetite and demand for commodity-linked assets, reinforcing optimism around Australia’s economic outlook.

Japan Pulls Back as Investors Take Profits

Japan’s Nikkei 225 declined 0.78% to 54,293.36, giving back a portion of Tuesday’s sharp gains. The pullback was largely attributed to profit-taking rather than a deterioration in fundamentals, as investors reassessed positions after one of the strongest single-day rallies of the year.

The Japanese Yen Index slipped 0.11%, offering limited currency support. Exporters and manufacturing stocks saw modest selling as traders opted to pause following the rapid advance earlier in the week. Despite the decline, the Nikkei remains well above recent lows, indicating that the broader recovery trend remains intact.

Hong Kong and India Edge Higher; Sri Lanka Market Closed

Hong Kong’s Hang Seng Index rose slightly, adding 0.07% to 26,853.73. The muted gain reflected cautious positioning as investors weighed recent volatility against improving regional sentiment. Financials and technology stocks were mixed, resulting in a largely flat close.

India’s S&P BSE Sensex advanced 0.09% to 83,817.69, posting a modest gain as domestic-focused sectors helped offset global uncertainty. The restrained move suggested continued selectivity among investors, even as broader sentiment stabilized.

Elsewhere, the Sri Lanka – Colombo Stock Exchange was closed in observance of Independence Day. The holiday reduced participation from South Asia but had minimal impact on overall regional market direction.

Outlook: Stabilization Continues as Markets Reassess Risk

Looking ahead, Asian markets appear to be entering a stabilization phase following sharp swings earlier in the week. Investors will continue to monitor global economic data, earnings updates, and currency movements for confirmation that risk appetite can be sustained. While pockets of volatility remain possible, particularly after strong rebounds, the resilience shown across South Korea, China, and Australia suggests that confidence is gradually returning. If global conditions remain supportive, markets may continue to grind higher, though with greater selectivity and sensitivity to near-term catalysts.