On Monday, Asian markets were mixed as traders seemed cautious ahead of the monetary policy decisions from the US Fed and the European Central Bank later in the week.
The Australian stock market is closed on Monday in observance of Australia Day, while Taiwan remains shut for the New Year holidays. Indonesia is also closed for the Isra and Miraj holiday.
With the Lunar New Year celebrations ahead in several markets across the region, including China, South Korea, and Taiwan, trading activity is expected to remain subdued during the extended break.
Nikkei slips below 40,000
Japan’s stock market saw a decline, extending the losses from the previous session despite opening in the green.
The Nikkei 225 Index fell to 39,821.40, dropping 0.28%, as it was weighed down by broadly negative cues from Wall Street.
While weakness in index-heavyweights and technology stocks contributed to the drop, gains in financial stocks provided some offset.
Key Japanese companies showed mixed performance.
Shares of Japan’s chip-related companies also tumbled, with Advantest falling 8.2% and Tokyo Electron slipping 4.53%. SoftBank Group lost nearly 6%.
This decline was attributed to growing concerns over DeepSeek, a Chinese AI startup that introduced a free, open-source large-language model threatening US AI dominance.
However, in the banking sector, stocks such as Mitsubishi UFJ Financial and Mizuho Financial gained more than 2% each.
China and Hong Kong markets surge
Hong Kong stocks rose as investors anticipated increased fund inflows, driven by China’s measures to support its financial markets amid the US tariff challenges.
The Hang Seng Index climbed around 1% to 20,259.97, adding to a 0.8% gain this year, while the Tech Index saw a 1.5% increase.
Baidu led the rally with a 4% rise, followed by Alibaba Group, which climbed 2.8%. Other stocks like Trip.com and Xiaomi also saw gains.
The Shanghai Composite Index also rose by 0.5%. China’s CSI 300 was also in the green on Monday.
UBS reported that China’s plan to inject long-term capital into its stock market could result in up to 1.7 trillion yuan (around US$236.2 billion) of inflows from insurers, mutual funds, and social-security funds, further boosting sentiment.
China’s China Securities Regulatory Commission (CSRC) on Sunday introduced initiatives to promote the growth of equity and bond ETFs, aiming to attract more investment.
This followed earlier measures encouraging large state-owned mutual funds and insurers to buy more stocks.
China’s manufacturing data showed contraction in January, with the official purchasing managers’ index (PMI) for January at 49.1, below the 50.1 estimate.
This data, coupled with a 11% jump in industrial profits in December, fueled investor concerns over the country’s economic recovery.
Wall Street snaps 4-day winning streak on Friday
In the US, last Friday saw a dip in major indices after a four-day winning streak.
The S&P 500 closed 0.3% lower, while the Nasdaq Composite dropped 0.5%, and the Dow Jones fell by 140.82 points or 0.3%.
Investors took profits, especially after the market’s strong performance earlier in the week, which had been driven by optimism surrounding President Donald Trump’s return to the White House and his pro-business policies.
Despite the slight pullback, all three major US indices ended the week in the green.
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