Asian markets mixed: China edges higher, Tokyo drops 2.5% amid AI bubble concerns

Indices

The main Asian indices are displaying a mix of resilience and caution as markets pause after a period of strong gains. The Nikkei 225 (^N225) is currently trading at 50212.27, representing a decline of -2.49515 for the session. This pullback follows record highs above 52411.34, highlighting a pause as investors reassess after robust rallies fueled by pro-growth policy expectations and a weaker yen. The Hang Seng Index (^HSI) stands at 25935.42, down slightly by -0.06547, reflecting ongoing volatility and increased caution. The SSE Composite Index (000001.SS) is trading at 3969.2483, up 0.22884, signaling selective optimism in the Chinese equity market. All three indices have flat short-term micro-trend signals, indicating a prevailing wait-and-see stance and lack of strong buy or sell signals at the moment. This environment suggests that traders are cautious, quick to take profits, and are closely watching for macro or policy catalysts before taking new positions.

Stocks

Stock performance across Asia is highly sector-driven and volatile. In Japan, technology and innovation-driven stocks have recently led rallies, with companies like Disco Corp. (TYO:6146) and Sumitomo Metal Mining (TYO:5713) posting robust gains of 7.5 and 6.87, respectively. Conversely, semiconductor names such as Tokyo Electron (TYO:8035) and Advantest Corp. (TYO:6857) have experienced declines up to -7.6, reflecting sector-specific headwinds and profit-taking after outsized advances. In China, mining and technology stocks have attracted strong buying interest, with Zijin Mining Group (HK:2899) up 6.38 and NetEase (HK:9999) rising 6.04. However, Chinese electric vehicle manufacturers such as Geely Automobile, Nio Inc. (HK:9866), and BYD have suffered declines ranging from -5 to -9 amid industry price wars and regulatory scrutiny. This divergence indicates continued rotation into perceived resilient sectors, with technology and mining favored while sectors exposed to policy risk remain pressured.

Economic News

Recent economic data and policy announcements are shaping market direction. In Japan, the manufacturing PMI dropped to 48.5, indicating contraction in industrial activity, even as the Bank of Japan’s Tankan index for large manufacturers improved to 14, reflecting resilience among major corporates. In China, Q2 GDP growth stands at 5.2, robust by global standards, though concerns remain about consumption and the sustainability of the recovery. The World Bank has revised China's 2025 GDP growth forecast upward to 4.8. Key policy moves include Japan’s planned fiscal stimulus and China’s opening to foreign investment in stock options, both supporting medium-term optimism.

Economic Events

A series of high-impact economic events is on the horizon. In China, the release of Balance of Trade data for October is expected, with an estimated value of 100, providing insights into external demand. Japan’s Bank of Japan will present its quarterly economic outlook, closely watched for signals on monetary policy and potential fiscal expansion. The National People's Congress in China and ongoing Communist Party leadership meetings are also likely to clarify future policy directions, which could prompt further volatility in equity and currency markets.

Market Sentiment

Market sentiment across Asia is cautiously optimistic but underpinned by indecision. The Nikkei 225’s recent rally reflects optimism around pro-growth policies and the technology sector; however, flat short-term trend signals and recent volatility point to underlying caution. In China, selective optimism is present, bolstered by upward GDP revisions and the anticipation of policy support, yet ongoing sectoral challenges—especially in electric vehicles—temper enthusiasm. The Hang Seng Index’s modest moves and flat trend signal investor wariness amid regional and global policy shifts. Overall, sentiment suggests traders are alert and nimble, ready to adjust positions as new macroeconomic and policy information emerges.

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