Asian Stocks Edge Lower as Japan Rally Fades and Hong Kong Tech Shares Slide
Asian stock markets traded mostly lower on Wednesday, with Hong Kong shares leading losses following a sharp decline in technology stocks. Meanwhile, the recent rally in Japanese equities appeared to be cooling after several record sessions.
Regional activity was subdued due to market holidays in China and South Korea, keeping overall trading volumes light.
Asian markets also took a weak cue from Wall Street, where major indexes slipped from record highs amid a pullback in chipmaking, AI, and cloud-related tech stocks. In Asian trade, S&P 500 futures edged up just 0.1%, as investors awaited comments from multiple Federal Reserve officials later this week for clues about the U.S. economy.
Adding to global caution, investors turned risk-averse as the U.S. government shutdown continued and a political crisis in France deepened. Meanwhile, gold prices surged past $4,000 per ounce, hitting a fresh record high in Asian trade.
Hong Kong Stocks Drop on Tech Losses
The Hang Seng Index fell 1%, making Hong Kong the weakest market in Asia on Wednesday. Major tech stocks dragged the index lower, with Alibaba, Baidu, and JD.com dropping between 2.7% and 5%. SMIC fell 2.6%, and Tencent Holdings slipped 0.7%.
The decline followed rising concerns about AI sector profitability, after an overnight report questioned Oracle’s cloud margins. Additional pressure came from news that Nvidia invested $2 billion in Elon Musk’s xAI, raising fears of “circular investing” within the AI ecosystem.
Despite the tech weakness, EV maker BYD gained nearly 2%, as Tesla’s unveiling of new low-cost models failed to impress investors, sending Tesla shares down 5% in U.S. trading.
Japan’s Rally Cools as Fiscal Questions Emerge
In Japan, the Nikkei 225 was flat, while the TOPIX rose 0.7%, both trading just below record highs. The rally that followed Sanae Takaichi’s election as LDP leader appeared to be losing steam as investors questioned how her proposed fiscal stimulus would be funded.
Takaichi, known for her pro-spending and tax-cut stance, is expected to become Japan’s next prime minister. Her policies include opposing further interest rate hikes by the Bank of Japan, but analysts warned this could create friction with BOJ Governor Kazuo Ueda, who maintains that rates should rise with inflation.
Stronger-than-expected household spending data in August also pressured Japanese markets, as rising consumption could force the BOJ to tighten policy sooner than expected. The yen weakened further, while bond prices fell amid growing investor caution.
Among major stocks, Toyota Motor Corp traded flat after recalling nearly 394,000 U.S. vehicles due to a rearview camera issue.
Other Asian Markets Mixed
Elsewhere in the region, Australia’s ASX 200 slipped 0.1%, and Singapore’s Straits Times Index fell 0.4%. James Hardie Industries outperformed, jumping 10% after reporting strong Q2 earnings.
In India, the Nifty 50 edged higher, staying above 25,000 points as investors awaited key third-quarter results from major tech firms, including Tata Consultancy Services, HCL Technologies, and Tech Mahindra.
