Asian equities experienced widespread declines on Monday as investors grappled with disappointing Chinese economic data and awaited crucial interest-rate announcements from both the U.S. Federal Reserve and the European Central Bank later in the week.
Gold prices dipped while the dollar strengthened after U.S. President Donald Trump briefly imposed tariffs on Colombia. Additionally, oil prices saw a downturn as Trump continued to urge the Organization of the Petroleum Exporting Countries (OPEC) to reduce prices.
China's Shanghai Composite Index closed slightly lower at 3,250.60. This came after recent data revealed an unexpected contraction in Chinese manufacturing activity for January, coupled with a sharp slowdown in non-manufacturing activity growth. These figures have stirred concerns regarding the anticipated growth for the first quarter of 2025, questioning the efficacy of existing stimulus measures.
Further complicating the economic outlook, profits at China's industrial companies declined for the third consecutive year in 2024, as official figures released on Monday indicated, underscoring the need for enhanced economic measures.
Conversely, Hong Kong's Hang Seng Index rose by 0.53 percent to 20,172.10, driven by a surge in Chinese tech giants such as Tencent and Alibaba.
In Japan, markets witnessed a notable decline as tech stock slumps overshadowed financial sector gains. The Nikkei 225 Index decreased by 0.92 percent to 39,565.80 while the broader Topix Index managed a slight gain of 0.26 percent, closing at 2,758.07.
Technology firms like Tokyo Electron, SoftBank Group, Advantest, and Fujikura saw stock prices tumble between 5-11 percent amid disruptions by the Chinese firm DeepSeek, which has emerged as a significant player in the AI sector. DeepSeek’s artificial intelligence chatbot has swiftly climbed to the top of Apple Store's download charts, casting doubts on Silicon Valley's substantial AI capital expenditure and the sustainability of America's technological edge in AI.
Among financial stocks, Mitsubishi UFJ Financial appreciated by 0.7 percent, while both Sumitomo Mitsui Financial and Mizuho Financial posted gains of 1.6 percent, buoyed by expectations that rising interest rates would bolster domestic profitability.
Markets in Seoul and Australia were closed for local holidays, while New Zealand's benchmark S&P/NZX-50 Index edged down by 0.19 percent to 12,999.72.
In the U.S., equities finished lower on Friday, yet still achieved two consecutive weeks of gains, bolstered by optimism surrounding Trump's business-friendly policies and his advocacy for reduced interest rates and oil prices.
Economic reports indicated a decline in U.S. consumer sentiment in January, marking its first drop in half a year. However, existing home sales reached a 10-month peak in December, according to separate analyses.
The S&P 500 concluded the session 0.3 percent lower, after reaching a new intraday record earlier. Similarly, the Dow Jones Industrial Average slipped by 0.3 percent, while the tech-heavy Nasdaq Composite decreased by 0.5 percent.
