Global Market Recap: Asian Stocks Slide on Weak Chinese Data, Interest Rate Uncertainty

Global stock markets saw mixed performances as weak economic data from China and looming interest rate decisions by the U.S. Federal Reserve and the European Central Bank (ECB) weighed on investor sentiment. A stronger dollar and falling oil prices added to the cautious mood, while U.S. markets recorded weekly gains despite a slight pullback on Friday.

Asian Markets Overview

Asian markets were broadly down on Monday, with notable declines in China and Japan, as investors reacted to disappointing economic indicators from China and uncertainties surrounding global interest rates.

China and Hong Kong

• The Shanghai Composite slipped marginally, closing at 3,250.60, after data revealed that Chinese manufacturing activity contracted in January, and non-manufacturing activity growth slowed significantly.

• Official figures also showed a third consecutive year of declining industrial profits in 2024, amplifying concerns over Q1 2025 growth and the efficacy of existing stimulus measures.

• In contrast, Hong Kong's Hang Seng Index rose 0.53% to 20,172.10, buoyed by gains in Chinese tech stocks, with Tencent and Alibaba leading the charge.

  
  

Japan

• Japanese markets faced sharp declines in technology stocks, overshadowing gains in the financial sector. The Nikkei 225 dropped 0.92% to 39,565.80, while the Topix Index managed a modest gain of 0.26% to close at 2,758.07.

• Major tech firms, including Tokyo Electron, SoftBank Group, and Advantest, experienced losses ranging from 5% to 11%, triggered by competition fears surrounding DeepSeek, a Chinese AI firm that has become a dominant player in the artificial intelligence space.

• In the financial sector, Mitsubishi UFJ Financial gained 0.7%, while Sumitomo Mitsui Financial and Mizuho Financial rose 1.6%, reflecting optimism over potential domestic profit growth amid higher interest rates.

Other Asian Markets

• South Korea's markets were closed for the Lunar New Year holiday, while Australia’s markets remained closed for Australia Day.

• New Zealand’s S&P/NZX-50 slipped 0.19% to close at 12,999.72, mirroring the cautious tone in global markets.

Commodities and Currency Markets

Gold and the Dollar

• Gold prices retreated, reflecting a shift toward the dollar, which gained strength following U.S. President Donald Trump’s imposition of tariffs on Colombia.

Oil

• Oil traded lower as President Trump reiterated calls for OPEC to reduce prices. Concerns over global demand, fueled by weak Chinese data, also pressured crude prices.

U.S. Markets Recap

U.S. stocks ended Friday with slight losses but secured back-to-back weekly gains amid optimism over Trump’s pro-business policies and his push for lower interest rates and oil prices.

• The S&P 500 dipped 0.3% after reaching a record high earlier in the session.

• The Dow Jones Industrial Average dropped 0.3%, and the tech-heavy Nasdaq Composite shed 0.5%.

Economic Data

• U.S. consumer sentiment declined in January for the first time in six months, raising questions about consumer confidence heading into 2025.

• Meanwhile, existing home sales rose to a 10-month high in December, reflecting strength in the housing market.

Outlook for the Week

Investors are now turning their attention to the Federal Reserve and European Central Bank meetings this week for clarity on interest rate policies. With weak Chinese data weighing on sentiment and the emergence of new global economic uncertainties, market participants are bracing for volatility in the days ahead.

The evolving landscape in artificial intelligence, especially the rise of DeepSeek, also adds an intriguing dynamic, with potential repercussions for both Silicon Valley and global tech investors.