Asian markets close lower, Tokyo down 0.11% as focus turns to new Prime Minister

Indices

The main Asian indices are reflecting a dynamic yet cautious environment as investors respond to a blend of domestic developments and global influences. The Hang Seng Index (^HSI) is trading at 25.794,50, down -0.95% for the session, signaling subdued sentiment and persistent volatility in Hong Kong’s market. The Nikkei 225 (^N225) in Japan stands at 49.261,00, marking a small decline of -0.11%, and trading just below its 52-week high, indicating that bullish momentum has paused as investors consider recent policy and leadership changes. The SSE Composite Index (000001.SS) in China is at 3913.76, down -0.07%, showing a modest pullback after recent gains. Short-term trend signals for all three indices—Hang Seng Index (^HSI), Nikkei 225 (^N225), and SSE Composite Index (000001.SS)—are flat, which underscores the market’s hesitancy to commit to a clear direction amid prevailing uncertainties. This flatness suggests that while structural resilience exists, traders are remaining on the sidelines awaiting stronger macro or policy signals.

Stocks

Sector rotation continues to be a major theme across the region. In China, mining and technology stocks are showing strength, with Zijin Mining Group (HK:2899) and NetEase (HK:9999) registering strong gains of 6.38 and 6.04, respectively, indicating a shift toward defensive and resilient sectors. Conversely, the Chinese electric vehicle sector remains under pressure, with companies such as Geely Automobile (HK:0175), Li Auto (HK:2015), Nio Inc. (HK:9866), Xpeng (HK:9868), and BYD (HK:1211) experiencing declines between -5 and -9, reflecting industry price competition and regulatory risk. In Japan, technology and industrial names are in focus: Disco Corp. (TYO:6146) leads with a 7.5, while Sumitomo Metal Mining (TYO:5713) and Sumitomo Pharma (TYO:4506) are also notable outperformers. However, semiconductor heavyweights like Tokyo Electron (TYO:8035) and Advantest Corp. (TYO:6857) have seen sharp drops of -6.5 and -7.6, suggesting sector-specific headwinds from global supply chain and trade issues.

Economic News

Recent economic releases are shaping investor perspectives in both markets. In China, GDP growth for the second quarter posted 5.2 year-on-year, a robust outcome but with signs of moderation. The World Bank has revised China’s 2025 GDP growth forecast up to 4.8, citing improved short-term prospects, although a slowdown is projected for 2026 due to weaker external demand and reduced fiscal space. In Japan, the manufacturing PMI declined to 48.5, pointing to ongoing contraction in the sector, but the BOJ’s Tankan index improved to 14, indicating resilience among large manufacturers despite headwinds. The People’s Bank of China kept its one-year Loan Prime Rate at 3.0 for the fifth consecutive month, reinforcing a cautious policy stance.

Economic Events

Key political and policy events are adding to market uncertainty. In China, the ongoing National People’s Congress and the Communist Party’s Fourth Plenary Session are expected to provide new policy direction and potential support measures, especially regarding the nation’s five-year development plan. In Japan, the Bank of Japan is scheduled to hold a policy meeting at month-end, with attention on whether it will maintain its current monetary stance. Other important data releases include Japanese trade statistics for September and the upcoming Hiroshima gubernatorial election, both of which could influence market momentum.

Market Sentiment

Overall sentiment across Asian markets is mixed and cautious. In Japan, the Nikkei 225’s proximity to record highs and the BOJ’s optimism suggest confidence in policy continuity, yet flat micro-trend signals indicate hesitancy and a wait-and-see approach. In China, short-term optimism from GDP upgrades and policy expectations is balanced by concerns over sector-specific challenges, especially in the electric vehicle industry and persistent regulatory interventions. Hong Kong’s mood remains subdued, with ongoing volatility in the Hang Seng Index and a preference for defensive positioning. Traders across the region are awaiting stronger macroeconomic signals or policy clarity before taking decisive positions, leading to subdued volumes and a lack of strong directional conviction.

Please note that the analysis is for informational purposes only and does not constitute financial advice. Users should conduct their own research.