Asian stocks are positioned for their longest weekly winning streak since May, with the MSCI Asia Pacific Index heading for a fourth consecutive week of gains amid a technology sector rally. The regional benchmark has surged more than 7% during this four-week period, driven by investor enthusiasm for artificial intelligence and semiconductor stocks following strong corporate earnings.

Regional Market Performance

Asian markets showed mixed performance on Friday, with regional shares reflecting varied investor sentiment across different markets. A regional measure of technology shares climbed to record levels as investors increased their bets on artificial intelligence, reinforcing the sustainability of the current rally.

The divergent performance highlighted the selective nature of the current rally, with technology-focused markets outperforming broader indexes. South Korea, positioned as the poster child for artificial intelligence investments, led regional advances while Japan recorded losses.

US Market Impact and TSMC Catalyst

The Asian rally gained momentum following strong performance in US markets, where equities recovered from their first back-to-back losses of the year. Taiwan Semiconductor Manufacturing Company's (TSMC) exceptional earnings results and improved outlook served as a key catalyst, with the chipmaker's performance lifting related stocks including Nvidia Corp. and ASML Holding NV.

TSMC's blowout outlook helped allay concerns over the sustainability of data-center spending amid previous rotation away from richly priced technology shares, restoring faith in the durability of a major bull-market driver.

Technology Sector Momentum

The semiconductor rally has renewed confidence in the technology sector's role as a key market driver. A gauge of chipmakers climbed to record levels on Thursday, boosting both US and European shares. The strong performance addressed investor concerns about the sustainability of data-centre spending and expensive technology equity valuations.

While small-cap stocks rose on indications of economic improvement, the technology sector's resilience demonstrated through TSMC's performance reinforced investor confidence in artificial intelligence investments and semiconductor demand.

Broader Market Dynamics

The current rally reflects growing investor confidence in artificial intelligence investments and semiconductor demand. US stocks bounced back as TSMC's strong results restored faith in technology sector fundamentals, while concerns about rotation away from expensive technology equities were alleviated by the positive earnings surprise.

Treasury bonds saw no movement in Asian trading after declining in US sessions when unemployment claims unexpectedly fell to the lowest level since November. Oil prices stabilized after earlier volatility, while gold and silver saw slight declines in early Friday trading. The technology sector's continued strength, combined with improving economic indicators, has reinforced the sustainability of the current bull market trend across Asian and global technology stocks.

Indian investors looking to deepen their exposure to global markets in 2026 face a critical strategic decision: whether to invest broadly through ETFs or selectively through individual stocks. According to Tarun Singh, Founder and MD of Highbrow Securities, the current environment of geopolitical uncertainty, market volatility, and a strong US equity rally calls for a measured, layered investment approach.

Singh advocates against making binary decisions between exiting or aggressively chasing US stocks. Instead, he recommends Indian investors first build a stable core through low-cost US ETFs, then selectively add high-conviction stock or sector bets to enhance returns. This strategy balances diversification with opportunity, allowing investors to participate in long-term US growth themes like AI and innovation while managing risk more effectively.

Market Outlook and Performance Targets

Despite recent market gains, analysts remain optimistic about US market prospects for 2026. The S&P 500 is projected to reach around 7,600, driven by ongoing growth in artificial intelligence and strong company earnings. US markets started 2026 positively, with the Dow jumping 1,500 points, helping maintain momentum across most sectors.

Geopolitical Considerations and Sector Impact

Potential geopolitical developments, including possible US military operations in regions like Venezuela, could create short-term market volatility. Such operations might impact markets through:

• Changes in oil prices and investor flight to safer assets like the US dollar
• Limited overall effect due to Venezuela's modest 1.00% share of global oil supply
• Potential benefits for defense companies like Lockheed Martin and RTX through increased military spending expectations
• Mixed impact on energy companies, with refiners potentially benefiting from cheaper oil while producers face price pressure

Investment Strategy Recommendations

For 2026, Singh recommends adding to US portfolios on a selective basis rather than complete withdrawal. The approach should involve:

ETF Foundation Strategy:

• Broad US ETFs like VOO (S&P 500 tracker) offer low-cost diversification
• Sector-specific ETFs provide targeted exposure with fees under 0.10%
• Proven track record and minimal management requirements

Selective Stock Additions:

• Individual stocks like Nvidia in AI sector for higher return potential
• Requires active management and clear investment thesis
• Suitable for investors with global market understanding

Optimal Portfolio Construction

For Indian professionals with global market understanding, the recommended approach involves using ETFs as the main foundation while adding targeted stock picks to boost performance. This strategy allows investors to:

• Maintain stable core exposure through diversified ETFs
• Enhance returns through selective high-conviction positions
• Manage risk effectively during uncertain market conditions
• Participate in long-term growth themes while maintaining flexibility

The strategy emphasizes taking selective profits in overvalued areas while building positions carefully, supported by solid market fundamentals and favorable policy environment. Rather than complete portfolio restructuring, the focus remains on strategic enhancement through measured additions and tactical adjustments.