Asian markets closed in red on Monday: weak start to the last trading week of the year

Indices

The main Asian indices are displaying a phase of consolidation, underpinned by both global uncertainties and region-specific catalysts. The Nikkei 225 (^N225) is currently trading at 50.53K, reflecting a decline of -0.44, suggesting mild profit-taking and a pause after its recent rally to multi-decade highs. The Hang Seng Index (^HSI) stands at 25.64K, down by -0.71, as technology and property stocks face continued headwinds. Meanwhile, the SSE Composite Index (000001.SS) is trading at 3.97K, showing a marginal increase of 0.04, aided by policy support and momentum in select sectors. All three indices are displaying a FLAT micro-trend, signaling a near-term consolidation phase as investors digest recent gains and await clearer macroeconomic signals. This pattern may indicate that trading strategies should focus on range-bound movements and short-term tactical opportunities rather than directional bets.

Stocks

Stock leadership across the region remains highly sector-driven. In Japan, semiconductor and technology names such as Resonac Holdings and SUMCO Corp. have shown robust gains, benefiting from the global AI rally and positive sentiment towards the tech sector. SoftBank Group Corp. has also experienced a rebound, reflecting renewed risk appetite. On the downside, Japanese exporters like Toyota, Sony, and Panasonic are under pressure due to a stronger yen, which negatively impacts overseas earnings prospects.

In Hong Kong, technology stocks continue to provide support with names like Alibaba Group (9988.HK) and Tencent Holdings (0700.HK) posting notable gains, suggesting investor confidence in the sector’s resilience. However, property and financials remain laggards, contributing to the index’s recent weakness. The Shanghai market shows high turnover in healthcare and automotive stocks, such as Dahu Health Industry and Changchun Engley Automobile, each rising by 10.1%, indicating traders are targeting high-growth opportunities in specific industries.

Economic News

Recent economic developments are playing a central role in shaping market direction. In Japan, the Bank of Japan raised its policy rate to 0.75, the highest since 1995, reflecting confidence in the domestic recovery but also introducing volatility in currency markets. However, Japan’s Manufacturing PMI contracted to 48.7, signaling ongoing challenges in the industrial sector.

In China, weak retail sales and factory output have been offset by optimism around potential government stimulus, with the People’s Bank of China reiterating its commitment to maintain ample liquidity. Hong Kong’s retail sales grew by 5.3 and industrial production increased by 5.4, offering some support to consumer and industrial names.

Economic Events

Attention is currently centered on central bank decisions and high-level policy meetings. The Bank of Japan’s recent rate hike has heightened volatility and is expected to influence cross-border capital flows. Market participants are closely monitoring the upcoming U.S. Federal Reserve meeting and China’s annual “Two Sessions” parliamentary gathering, both of which are likely to provide guidance on inflation, bond purchases, and policy support. In Hong Kong, the next significant data release is the Balance of Trade report, which is expected to show a widening deficit with an estimated figure of -43 for November, potentially weighing on local sentiment.

Market Sentiment

Current sentiment across Asian markets is cautiously optimistic, with a bias towards selective risk-taking in high-growth sectors. The Nikkei 225’s recent highs demonstrate renewed confidence following policy normalization, although caution persists amid global tech sector volatility and macroeconomic uncertainty. The Hang Seng Index is experiencing targeted buying in technology and healthcare, bolstered by government signals and hopes for further stimulus, despite underlying caution. The Shanghai Composite reflects a neutral-to-bullish stance, supported by expectations of policy action and strong IPO activity, yet manufacturing weakness continues to temper broad enthusiasm. Overall, traders are favoring defensive strategies and tactical sector rotation, keeping a close watch on central bank actions and macroeconomic data for further direction.

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