Asian stocks close mixed amid China inflation focus and looming Fed verdict

Indices

The main Asian indices are currently reflecting a mixed and cautious market tone. The Nikkei 225 (^N225) is trading at 50.6K, registering a slight decline of -0.1. This marginal pullback follows recent robust gains, and the index remains well above its 50-day and 200-day averages, suggesting underlying strength despite short-term consolidation. The Hang Seng Index (^HSI) has risen to 25.54K, up 0.42, buoyed by selective sector buying and hopes for further stimulus from China. The Shanghai Composite Index (000001.SS) currently sits at 3.9K, down -0.23, as weak factory activity data continues to weigh on sentiment. All three indices show a FLAT micro-trend, indicating a lack of clear directional conviction and a period of consolidation while markets await further policy signals.

Stocks

Stock leadership is sector-driven and sensitive to both macro news and earnings. In Japan, technology and industrial names such as Fanuc Corporation (6954.T) have outperformed, with Fanuc gaining nearly 12 on strong earnings and renewed global demand for automation. The Hang Seng has seen notable moves in technology heavyweights, with Alibaba Group Holding Limited (9988.HK) rising 6 and Tencent Holdings Limited (0700.HK) advancing 4, both benefiting from renewed investor appetite for large-cap tech. In Shanghai, performance is more subdued, with a lack of clear sector leadership and sentiment dampened by persistent manufacturing weakness. High-turnover names such as Nio Inc. (NIO) and select rare earth producers have attracted tactical flows, highlighting a preference for short-term momentum plays among traders.

Economic News

Recent economic releases have been pivotal in shaping Asian market direction. In Japan, the November Manufacturing PMI contracted to 48.7, and disappointing corporate investment data have contributed to the Nikkei's volatility. However, robust demand in the 30-year Japanese Government Bond auction provided support, signaling confidence in fiscal stability. In Hong Kong, retail sales grew 5.3 year-over-year, surpassing expectations and indicating resilient consumer demand. China continues to face macroeconomic headwinds, with factory activity contracting for the eighth consecutive month, reinforcing investor caution despite ongoing stimulus hopes.

Economic Events

Key global economic events are at the forefront of market attention. The upcoming Bank of Japan policy meeting on December 18–19, 2025, is highly anticipated, with markets pricing in a meaningful chance of a rate hike. Any shift in Japanese policy could directly impact both currency and equity markets across Asia. In China, the market is focused on future PMI prints and potential policy announcements, as further stimulus could trigger rotation into mainland and Hong Kong equities. The U.S. Federal Reserve meeting and upcoming U.S. inflation data are also being closely monitored, as they will influence global risk appetite and cross-border capital flows.

Market Sentiment

Overall sentiment across Asian markets is cautiously optimistic but highly selective. The Nikkei 225 remains technically resilient, buoyed by sector rotation into technology and industrial names and a supportive policy backdrop. The Hang Seng Index is benefitting from selective large-cap buying, particularly in technology, yet remains vulnerable to global trade tensions and policy uncertainty. The Shanghai Composite displays a more neutral-to-cautious tone, with weak domestic activity and manufacturing data continuing to limit enthusiasm. Traders are favoring defensive positioning and short-term tactical strategies, while remaining alert to policy-driven inflection points. The divergence in global central bank policies—especially the potential for a Bank of Japan hike versus a U.S. Fed cut—remains a key cross-market risk with the potential to alter currency dynamics and asset flows in the region.

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