Asian markets in the red: tech and AI stocks sell off amid U.S. budget deadlock concerns

Indices

The main Asian indices are displaying a blend of resilience and caution amid recent volatility and shifting macroeconomic signals. The Shanghai Composite Index (000001.SS) is currently at 3997.5557, reflecting a modest drop of -0.25461. This decline follows contraction in exports and a broader market cooldown, suggesting that traders remain cautious. The Hang Seng Index (HSI) stands at 26232.34, down -0.95738, hovering just below its 50-day average. This move signals hesitance as investors digest regional and global headwinds. The Nikkei 225 (N225) in Japan is trading at 50276.37, showing a decrease of -1.19353, after a record run-up, indicating a pause in momentum and recent profit-taking. All three indices exhibit flat short-term micro-trend signals, reinforcing a “wait-and-see” stance and the absence of strong buy or sell signals.

Stocks

Stock performance across China and Japan remains highly sector-driven and volatile. In China, technology and domestic consumption names are showing relative strength, while export-dependent companies and electric vehicle manufacturers like NIO Inc. (NIO) are under pressure, experiencing declines such as -1.78326. In Japan, technology and innovation-driven firms have outperformed earlier in the week, but recent sessions have seen profit-taking and a pullback in major tech names. High-growth and tech themes continue to attract attention, but sector rotation is evident as traders seek relative safety in resilient sectors and avoid those exposed to regulatory or global demand risks.

Economic News

Recent economic data and news have played a key role in shaping market direction. In China, October exports contracted by -1.1 and imports grew just 1, with a striking -25 drop in shipments to the U.S. This weakness is weighing on market sentiment, but a recent trade de-escalation deal between the U.S. and China is expected to support future recovery. In Japan, manufacturers’ confidence has softened, reflecting worries about China’s slowdown and persistent inflation. The Tankan index for large manufacturers improved to 14, signaling some resilience, but the manufacturing PMI slipped to 48.5, pointing to ongoing sectoral headwinds.

Economic Events

Key economic events this week include the release of China’s Services PMI and Caixin Services PMI, with previous readings at 52.9 and actual at 52.6, signaling stable but slightly moderating growth in the services sector. The Chinese Balance of Trade for October printed at 90.07 versus an estimate of 95.6, hinting at ongoing trade headwinds. In Japan, attention is on the upcoming Bank of Japan policy communications and the 2025 NHK Trophy, which, while not market-moving itself, reflects the calendar’s relatively lighter economic schedule. Investors remain alert to potential surprise policy signals or macroeconomic data shifts.

Market Sentiment

Overall market sentiment remains cautiously optimistic but is characterized by underlying indecision. The flat short-term trend signals and recent volatility across the Nikkei 225, Hang Seng Index, and Shanghai Composite Index suggest that investors are refraining from aggressive positioning, preferring to observe upcoming economic and policy developments. Robust economic indicators and policy support underpin a positive bias, especially in technology and industrials. However, persistent concerns about global demand, regulatory risks, and sector-specific headwinds—particularly in export-oriented and electric vehicle sectors—keep traders vigilant and selective in their exposure.

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