Asian stock markets traded in a mixed-to-lower range on Monday as U.S. trade tariffs and high interest rates continued to weigh on investor sentiment. While Japan’s GDP data came in stronger than expected, it failed to significantly boost equities. Meanwhile, China’s AI-driven tech rally took a breather after weeks of strong gains, adding to regional uncertainty.
✔ How will U.S. tariffs impact Asian markets?
✔ Why did Japan’s strong GDP fail to boost stocks?
✔ Is China’s AI rally losing steam, or is there more upside ahead?
📉 China’s AI Tech Rally Pauses; Tencent Jumps on DeepSeek Integration
🔹 China’s CSI 300 and Shanghai Composite indexes dipped 0.1%, while Hong Kong’s Hang Seng index also slipped as investors took a cautious stance.
🔹 Over the past three weeks, Chinese tech stocks surged, driven by optimism over AI advancements following the launch of DeepSeek R1 in late January.
🔹 However, the rally took a pause, with analysts suggesting that while Chinese markets still have upside potential, the fear of a looming U.S.-China trade war is dampening sentiment.
🔹 Tencent Holdings (HK:0700) surged 6% after its Weixin app began testing DeepSeek integration, keeping some AI-exposed stocks in play.
📌 Key Takeaways:
✔ AI stocks in China remain a key driver of market movement.
✔ Further tensions with the U.S. could limit gains in Chinese equities.
✔ Investors remain cautious about long-term regulatory risks.
📊 Japan’s Stock Market Unfazed by Strong GDP Growth
🔹 Japan’s Nikkei 225 rose just 0.1%, while the broader TOPIX index gained 0.3%, despite GDP data showing stronger-than-expected economic growth in Q4.
🔹 Japan’s economy expanded at a faster pace due to strong exports and capital spending, helping support the Japanese yen.
🔹 However, private consumption slowed, raising concerns about Japan’s biggest economic driver and the sustainability of growth.
🔹 Spring wage negotiations are expected to result in higher wage hikes, which could support domestic spending in the coming months.
📌 Why Didn’t Japan’s Stock Market React Strongly?
✔ A strong yen reduces the competitiveness of Japanese exports.
✔ Concerns over private consumption slowdown overshadowed GDP growth.
✔ The Bank of Japan may maintain its current stance on interest rates.
📉 Australian Stocks Decline Before Central Bank Decision
🔹 Australia’s ASX 200 index dropped 0.8% as investors took profits ahead of the Reserve Bank of Australia’s policy decision on Tuesday.
🔹 The RBA is expected to cut interest rates by 25 basis points, but analysts warn that the central bank may still remain hawkish, as inflation remains stubbornly high.
🔹 Australian markets recently hit record highs, making them vulnerable to profit-taking ahead of the policy announcement.
📌 What’s Next for Australian Stocks?
✔ A rate cut could provide some relief for equities.
✔ Persistent inflation may force the RBA to maintain a cautious approach.
✔ Investors are closely watching the central bank’s guidance on future rate moves.
📈 Mixed Performance Across Broader Asian Markets
🔹 South Korea’s KOSPI index climbed 0.8%, supported by gains in AI-driven chipmaking stocks.
🔹 Singapore’s Straits Times Index rose 0.4%, despite weak non-oil exports in January.
🔹 Taiwan’s TSMC (TW:2330) gained 1.4%, after reports suggested that the company is considering acquiring Intel’s struggling business units.
🔹 India’s Nifty 50 futures pointed to a slightly positive open, though concerns over potential U.S. tariffs continue to weigh on investor sentiment.
📌 Key Trends to Watch:
✔ Semiconductor stocks remain in focus amid AI-driven demand.
✔ U.S. trade policies could influence Asia’s export-heavy economies.
✔ Investors remain cautious amid mixed economic signals.
🔍 Final Outlook – What’s Driving Asian Markets?
✔ U.S. trade tensions and inflation concerns are keeping investors cautious.
✔ China’s AI tech rally has temporarily paused, but long-term potential remains strong.
✔ Japan’s strong GDP failed to boost stocks due to concerns over private consumption.
✔ The Australian stock market is in wait-and-see mode ahead of the RBA decision.
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