Asian Markets Decline Amid U.S. Rate Concerns, China Surges on Stimulus

Most Asian markets fell on Tuesday, following Wall Street’s overnight weakness, as a strong U.S. labor market reinforced expectations that interest rates will remain high. However, Chinese markets bucked the trend, rallying sharply as trade resumed post-holiday and investors responded to Beijing’s stimulus measures.

China Outperforms as Stimulus Boosts Confidence
Chinese indices, including the Shanghai Shenzhen CSI 300 and Shanghai Composite, surged between 6% and 8% in early trading, driven by optimism over newly announced stimulus measures. After reopening following the week-long Golden Week holiday, Chinese markets benefited from a wave of bargain hunting, as key indices had slipped to a seven-month low in September.

The Chinese government introduced a series of stimulus policies, including interest rate cuts, relaxed property market rules, and liquidity measures targeting the stock market. Further details on implementing these measures are expected later today, with investors eagerly awaiting additional fiscal support aimed at boosting growth.

Broader Asian Markets Slip Amid Rate Worries and Tech Sell-Off
Outside of China, other Asian markets struggled, weighed down by concerns over U.S. interest rates. Wall Street saw steep losses on Monday after stronger-than-expected nonfarm payrolls data fueled bets that the Federal Reserve would slow the pace of rate cuts. This uncertainty cast a shadow over global markets, particularly affecting technology stocks.

• Hong Kong’s Hang Seng index dropped nearly 4% on Tuesday, as investors engaged in profit-taking following a sharp rise fueled by optimism over Chinese stimulus.
• Japan’s Nikkei 225 fell 1.2%, while the TOPIX index shed 1.1%, despite data showing a slight slowdown in wage growth. Household spending remained robust in Japan, potentially sustaining inflation expectations.
• South Korea’s KOSPI index declined 0.7%, dragged down by a 1.5% drop in Samsung Electronics, which projected a weaker-than-expected third-quarter profit. Rival SK Hynix also fell more than 2%.
• Losses in Australia’s ASX 200 index were limited due to optimism over China’s rebound, with separate data indicating an improvement in Australian consumer sentiment in October.

Technology Stocks Face Pressure
Asian tech stocks bore the brunt of the decline, following weakness in their U.S. counterparts, such as Alphabet, Apple, and Amazon, which all fell on Monday amid regulatory concerns and negative analyst commentary.

The outlook for global technology giants remains uncertain as investors grapple with rate expectations and the potential for a slower economic recovery.