Deep red for Asian markets at the close: the Nikkei fell 3.22% and the Hang Seng dropped 1.72%

Indices

The main Asian indices are displaying a blend of resilience and caution as traders digest recent gains and macroeconomic signals. In Japan, the Nikkei 225 (^N225) is trading at 48702.98, reflecting a decline of -3.22099 amid recent profit-taking after a sustained rally to year highs of 52636.87. This pullback follows a period of strong advances, with the index still well above its 200-day moving average, implying underlying bullishness but short-term volatility.

In China, the Shanghai Composite Index (000001.SS) stands at 3939.8131, down -0.81109, remaining above its 50- and 200-day averages but showing signs of hesitance as geopolitical tensions rise and the broader economic outlook remains under scrutiny. The Hang Seng Index (^HSI) is at 25930.04, registering a drop of -1.72167, which highlights ongoing volatility and a lack of decisive direction. All three indices currently register flat micro-trend signals, indicating the absence of strong buy or sell momentum and a prevailing wait-and-see stance among traders.

Stocks

Stock performance across Asia is highly sector-driven and volatile. In Japan, technology and innovation-led names such as Disco Corp. (TYO:6146) and Sumitomo Metal Mining (TYO:5713) have posted recent gains of 7.5 and 6.87, reflecting continued investor enthusiasm for growth sectors. Conversely, semiconductor giants like Tokyo Electron (TYO:8035) and Advantest Corp. (TYO:6857) have faced declines up to -7.6, suggesting profit-taking and sector rotation.

In China, mining and tech stocks are outperforming, with Zijin Mining Group (HK:2899) up 6.38 and NetEase (HK:9999) rising 6.04. However, electric vehicle manufacturers like NIO Inc. (NIO) are under pressure, experiencing losses such as -1.20289 amid price wars and regulatory scrutiny. High-volume names such as UTime Limited (WTO) and Kaixin Auto Holdings (KXIN) also reflect speculative trading, with significant intraday swings.

Economic News

Recent economic data have played a pivotal role in shaping market behavior. In Japan, the Q3 GDP contracted by -1.8, which has weighed on the Nikkei 225 and prompted increased caution among investors. The manufacturing PMI dropped to 48.5, signaling sector contraction, although the Tankan index for large manufacturers improved to 14, indicating resilience among major corporates.

In China, Q2 GDP growth reached 5.2, and the World Bank has revised its 2025 growth forecast up to 4.8. However, vehicle sales and new loan growth have slowed, with Vehicle Sales YoY (Oct) at 8.8, a steep drop from the previous 14.9, and New Yuan Loans (Oct) at just 220, highlighting tightening credit conditions.

Economic Events

Key economic events in the near term include the Bank of Japan’s quarterly economic outlook and China’s National People's Congress, both of which are expected to provide fresh policy direction and potentially influence market sentiment and capital flows. Japan’s upcoming GDP Growth Annualized Preliminary (Q3) release, with a consensus forecast of -2.5, will be closely watched for confirmation of slowing momentum or signals of stabilization. In China, monetary policy decisions and the release of recent trade and retail sales data will be pivotal for gauging the pace of recovery and the outlook for domestic demand.

Market Sentiment

Overall market sentiment across the main Asian indices is cautiously optimistic but characterized by a pronounced sense of indecision and heightened sensitivity to macroeconomic and geopolitical developments. The flat micro-trend signals on the Nikkei 225, Hang Seng Index, and Shanghai Composite Index reinforce a wait-and-see approach among traders. Investors are quick to lock in profits, remain highly responsive to policy signals, and are showing a preference for defensiveness in the face of renewed economic and diplomatic uncertainties. Nonetheless, optimism persists around potential government stimulus and upward revisions to GDP, particularly in sectors such as technology, mining, and innovation, while areas exposed to regulatory and external risks remain under pressure.

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