Asian markets close higher despite Wall Street tech rout; Nintendo -10% on cost concerns

Indices

The Nikkei 225 declined by 0.6% to close at 54.39K, primarily pressured by technology stocks such as Tokyo Electron and Advantest. This downward move suggests investors are booking profits after prior AI-fueled surges and possibly bracing for currency and political volatility in Japan. Conversely, the Hang Seng Index surged over 3% to a new 52-week high at 26.45K, buoyed by robust performances from technology giants such as Alibaba and Tencent Holdings, indicating strong investor appetite for tech sector exposure in Hong Kong.

The Shanghai Composite Index posted a modest gain of 0.27% to reach 4.15K, supported by mining and AI-related stocks. This slight advance reflects cautious optimism as investors weigh economic growth prospects against ongoing uncertainties. South Korea’s Kospi Index achieved a new all-time high, closing at 5.28K, powered by significant gains in chip and battery stocks like Samsung Electronics and SK Hynix. This strong upward momentum highlights investor confidence in the semiconductor and tech hardware segments.

Buy/sell signals are sector-specific: Japanese and Shanghai indices suggest caution with a neutral to slightly bearish bias outside of AI and mining, while the Hang Seng and Kospi indices indicate continued bullish sentiment, particularly in technology-related sectors.

Stocks

Nintendo Co., Ltd. (7974.T) is under scrutiny following a sharp share price decline of over 10% despite reporting strong profits. This drop is attributed to investor skepticism over the sustainability of sales momentum for the upcoming Switch 2 console. The price action reflects concerns about future growth in the gaming sector, and investors are advised to adopt a cautious approach—potentially holding or trimming positions until clearer indications of product success emerge.

Economic News

Currency markets are contributing to regional volatility, with the Japanese yen weakening ahead of an unpredictable national election. This currency movement is adding pressure to Japanese equities and increasing market choppiness. Additionally, gold futures have reached a new record, trading at $2.88K, as investors flock to safe havens amid economic and geopolitical uncertainties. These developments are driving risk-off sentiment in certain pockets of the market, especially where growth outlooks are less certain.

Economic Events

Key economic data releases are upcoming in Europe, including Italy Services PMI (forecast 51.3, previous 51.5), France Services PMI (forecast 47.9, previous 50.1), and Germany Services PMI (forecast 53.3, previous 52.7). While these are European releases, their results may influence Asian market confidence and risk appetite due to global economic interdependence. Furthermore, global investors are closely watching for any escalation of geopolitical tensions, particularly involving the Middle East and U.S. policy responses, which could rapidly alter market direction.

Market Sentiment

Overall sentiment across Asian markets is cautious but opportunistic, with investors balancing the lure of technology-driven growth against the backdrop of currency volatility, geopolitical risks, and uncertain macroeconomic signals. The surge in tech and semiconductor shares, especially in Hong Kong and South Korea, demonstrates ongoing risk-taking appetite in sectors perceived as resilient. However, persistent concerns about global stability—exacerbated by Middle Eastern conflicts and the approach of key elections—are fostering selective strategies and defensive positioning, particularly in Japan and China.

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