Asian Stocks Dip Following Worst Session in 3 Weeks
Shares declined on Monday across Asia following China’s report of a drop in investment for November, highlighting the ongoing weakness in demand within the world’s second-largest economy. The retreat came after a disappointing conclusion to last week, as declines in prominent artificial-intelligence stocks pulled market down from its record peaks. Tokyo’s Nikkei 225 index declined by 1.5 per cent to 50,092.10, as investors anticipate whether the Bank of Japan will raise its benchmark interest rate as expected this week. The BOJ’s quarterly tankan survey of major manufacturers, published on Monday, indicated a modest enhancement in sentiment within these enterprises. The central bank reported that the measure of those expressing optimism increased to 15 from 14 in the last quarter, marking the highest level in four years. The index reflects the difference between the percentage of companies indicating positive conditions and those reporting unfavorable ones. Although the overall survey indicated progress, projections for the upcoming quarter appeared less optimistic.
Japan’s economy experienced a contraction at an annual rate of 2.3 per cent during the July-September quarter, marking the first decline in six quarters. An agreement between Japan and the US regarding President Donald Trump’s elevated tariffs, which caps baseline import duties at 15 percent, has alleviated uncertainty for major automakers and electronics firms. Experts indicated that the robust results could influence the BOJ to move forward with a 0.25 percentage point rate increase, raising the key rate to 0.75 percent. In Hong Kong, the Hang Seng experienced a decline of 0.7 per cent, settling at 25,786.45. The Shanghai Composite index inched up by 0.1 per cent, reaching 3,892.45. On Monday, China disclosed that investment in fixed assets, including factory equipment and other infrastructure, decreased by 2.6 percent in November compared to the same month last year. This suggests that such investments have declined by 11.1 percent year-on-year during the first 11 months of the year.
According to the government, retail sales experienced a 4 per cent increase from January to November compared to the previous year, while factory output saw a rise of 4.8 per cent. The latest data came after a high-level meeting of China’s Communist Party leadership last week, which resulted in no significant policy changes, alongside a commitment to persist in efforts to enhance consumer spending and investment essential for stimulating greater domestic demand. According to analysts, “Policy support should help drive a partial recovery in the coming months, but this probably won’t prevent China’s growth from remaining weak across 2026 as a whole.” In other parts of the region, Australia’s S&P/ASX 200 declined by 0.7 percent to 8,640.60, while Taiwan’s benchmark fell by 1.1 percent. The futures for the S&P 500 and the Dow Jones Industrial Average increased by 0.3 percent.
On Friday, the S&P 500 experienced a decline of 1.1 per cent from its all-time high, marking its worst day in three weeks, with a closing value of 6,827.41. The decline in tech stocks pulled the Nasdaq composite down by a market-leading 1.7 percent, closing at 23,195.17. The Dow declined by 0.5 percent, settling at 48,458.05. Broadcom, a significant player in the AI sector, pulled the market down, experiencing a decline of 11.4 percent despite reporting a profit for the latest quarter that exceeded analysts’ expectations. Analysts described the performance as solid, with CEO Hock Tan noting that a robust 74 percent growth in AI semiconductor revenue played a significant role in driving success. The decline heightened concerns regarding the AI surge that had erupted the previous day, as Oracle experienced a nearly 11 percent plunge, even after reporting a larger profit for the latest quarter than analysts had anticipated. Chip maker Nvidia experienced a decline of 3.3 per cent, while Oracle saw a further drop of 4.5 per cent. On Friday, stocks of companies reliant on US consumer spending exhibited relative strength, with two out of every five stocks in the S&P 500 experiencing gains. This week, oil prices have softened, potentially providing relief for consumers’ bills. In other dealings early Monday, US benchmark crude oil increased by 30 cents, reaching $57.74 per barrel. Brent crude, the international benchmark, increased by 29 cents to reach $61.41 per barrel. The US dollar decreased to 155.37 Japanese yen, down from 155.75 yen late Friday. The euro remained steady at $1.1739.
