Most Asian stock markets declined on Friday as investors scaled back expectations for a U.S. interest rate cut in December. Technology shares led the downturn, following sharp overnight losses in the sector on Wall Street.
Mixed economic data from China added further pressure, as the region’s largest economy continued to struggle with a prolonged slowdown.
Asian markets tracked the weak performance in the U.S., where major indices fell after renewed selling in tech stocks driven by concerns over stretched valuations linked to artificial intelligence. Broader sectors also dropped as traders quickly reassessed their expectations for a potential Federal Reserve rate cut in December. According to the CME FedWatch tool, markets are pricing in a 45.8% chance of a 25-basis-point cut and a 54.2% chance that rates will remain unchanged.
S&P 500 futures edged up 0.2% in early trading as investors attempted to recover some of the previous session’s losses. Reports of additional U.S. trade tariff exemptions provided limited support.
Tech Stocks Lead Declines in Asia
Technology-heavy markets saw the sharpest declines. South Korea’s KOSPI fell 2.5%, while Japan’s Nikkei 225 dropped 1.6%. The TOPIX, which is less concentrated in tech, slipped 0.8%.
Hong Kong’s Hang Seng Index declined 0.7%, despite some positive earnings reports overnight. Tencent fell 1% even after posting strong growth for the September quarter, while JD.com slid 4% despite beating profit expectations.
The tech sector came under pressure as concerns about an AI-driven valuation bubble intensified. NVIDIA fell more than 3% in the U.S. session, while TSMC’s U.S.-listed shares lost 2.9%.
Asian tech stocks with AI exposure were hit hard. Japan’s SoftBank Group dropped 5.7% and was on track for an 8% weekly loss after plunging nearly 20% the week before. The losses followed confirmation that SoftBank had accelerated a $40 billion investment in OpenAI.
South Korea’s SK Hynix fell 6.2%, and Samsung Electronics slid almost 4%.
China Stocks Slip as Industrial Data Disappoints
Losses in mainland Chinese indices were less severe due to their lower concentration of tech shares. The CSI 300 fell 0.4%, while the Shanghai Composite was little changed.
Chinese markets were pressured by data showing industrial production grew slower than expected in October. Weak demand and ongoing trade tensions with the U.S. continued to weigh on manufacturers. The bigger concern was a 1.7% drop in fixed asset investment, indicating a growing hesitation among businesses to spend. Retail sales provided a modest boost, rising slightly above expectations due to Golden Week holiday activity.
Broader Asian Markets Retreat
Asian markets broadly pulled back amid declining confidence that the Federal Reserve will cut rates in December. The shift in expectations was reinforced after several White House officials suggested that October’s inflation and employment figures may not be released ahead of the Fed’s meeting, leaving policymakers with limited visibility.
Australia’s ASX 200 dropped 1.3%, extending losses from the previous session as strong employment numbers reduced the likelihood of further rate cuts by the Reserve Bank of Australia. Singapore’s Straits Times Index fell 0.6%, while futures for India’s Nifty 50 rose 0.2%.
