The story

Asian stocks rebounded on Wednesday after a sharp selloff driven by concerns over AI valuations, rising competition, and spending ahead of crucial earnings from big tech firms and a Federal Reserve policy decision. South Korea's KOSPI gained over 1% in early trading after sinking more than 10% to a three-month low on Tuesday. Shares of SK Hynix rose 2% after the chipmaker posted a more than sixfold increase in quarterly operating profit but missed lofty expectations. MSCI's broadest index of Asia-Pacific shares outside Japan was 0.8% higher after shedding 3.6% on Tuesday and remains on course for a monthly drop of 6.6%. Japan's Nikkei gained 1% but is bracing for a 10% drop in July.

Earnings from Microsoft and Meta later in the day will be a key test of the AI trade, particularly after Alphabet and Tesla spooked investors last week with negative cash flow reports. Nasdaq futures were choppy in Asian hours and were last up 0.5% while European futures pointed to a higher open. Oil prices jumped 3% after fresh attacks in the Middle East shattered the relative calm of recent days in the U.S.-Iran war. Brent futures jumped to $86.80 per barrel while U.S. West Texas Intermediate crude rose over 3% to $81.95 after U.S. Central Command said Iran had launched multiple ballistic missiles that were successfully intercepted.