EWY hits $159.49 as Kospi jumps 14%

The move is also significant for investors because it points to renewed demand for cyclical and technology-heavy Asian exposure. South Korean shares, in particular, are highly sensitive to global semiconductor demand and foreign fund flows, while Japan’s market often benefits when overseas investors rotate into exporters and value stocks.

The gains come against a backdrop of mixed global macro signals. U.S. Treasury yields have been edging around the mid-4% area on the 10-year note and just above 4.1% on the 2-year, levels that still keep some pressure on equity valuations but have not been enough to derail the latest risk-on trade. The dollar is also showing signs of softness, a backdrop that typically helps Asian assets and boosts the earnings translation for exporters.

U.S.-listed Korea and Japan equity funds are reflecting the enthusiasm. The iShares MSCI South Korea ETF, EWY, rebounded to $159.49 on July 31 after plunging to $144.21 a day earlier, with volume above 22 million shares, while the iShares MSCI Japan ETF, EWJ, rose to $92.19 from $89.35 in the same period. EWY remains well above its 200-day moving average but still below the 50-day line, underscoring how violent the recent swings have been.

Technical readings also point to stretched but still active momentum, with EWY’s RSI rebounding from deeply oversold territory after briefly hitting 26.4 and EWJ’s RSI near 48.4, suggesting Japan’s move is less extreme but still constructive. The backdrop in U.S. equities remains elevated as Adalytica’s S&P 500 trade signals show awareness at “Extreme Greed,” a reminder that investors are already leaning hard into risk.

For investors, the key question is whether the rally has follow-through or simply reflects a short-covering surge. Exporters, chipmakers and Japan-focused funds stand to benefit if the weaker-dollar, lower-yield tone persists, while traders who chased the move late could be vulnerable if rates back up or if global growth sentiment cools.

The next catalyst is whether Asian markets can hold these gains into the next U.S. trading session and whether regional earnings and policy cues justify the move. A reversal in Treasury yields, renewed dollar strength or weaker China-growth sentiment could quickly test the durability of the rebound.