^{Photo: Bloomberg.com}

Markets Open the Week on the Back Foot

Asia-Pacific equities moved lower on Monday, extending last week’s global risk-off tone as investors reacted to softer economic data from China and lingering weakness in U.S. technology stocks. South Korean markets led regional losses, while sentiment across Asia remained fragile following a pullback on Wall Street.

The declines came as investors paused after months of enthusiasm around artificial intelligence-related stocks and reassessed growth prospects across major economies.

South Korea Hit Hard by Tech Weakness

South Korea’s equity markets underperformed the region. The benchmark Kospi index dropped 2.16%, while the tech-heavy Kosdaq fell 1.17%. Losses were concentrated in large semiconductor names, reflecting broader pressure on global chip stocks.

SK Hynix slid more than 4%, while Samsung Electronics declined 3.3%, tracking weakness in U.S.-listed technology and AI-related shares late last week. The sector has been a major driver of South Korea’s market performance this year, making it particularly sensitive to shifts in global investor sentiment.

China Data Fuels Growth Concerns

Investors across Asia closely watched China’s latest economic releases, which underscored ongoing weakness in domestic demand. Retail sales rose just 1.3% year over year in November, sharply missing market expectations of 2.8% growth and slowing from October’s 2.9% increase.

Industrial production expanded 4.8% from a year earlier, slightly below the prior month and falling short of forecasts for a 5% rise. The data reinforced concerns that China’s post-pandemic recovery remains uneven, with consumption continuing to lag despite policy support.

Mainland Chinese equities were relatively stable, with the CSI 300 index little changed, while Hong Kong’s Hang Seng index declined 0.79% as investors digested the mixed data.

Japan Sentiment Improves but Stocks Still Fall

In Japan, shares moved lower despite encouraging business sentiment data. The Nikkei 225 fell 1.3%, while the broader Topix index slipped 0.27%.

Earlier in the day, the Bank of Japan released its closely watched Tankan survey, which showed improving confidence among large manufacturers. The headline index rose to +15 in the fourth quarter, the highest level in four years, up from +14 in the previous quarter and in line with economist expectations. The non-manufacturing sentiment index came in at a solid +34, highlighting resilience in the services sector.

Despite the upbeat survey, Japanese equities followed the broader regional trend lower, reflecting global rather than domestic drivers.

Australia and Broader Regional Moves

Australia’s S&P/ASX 200 declined 0.66%, tracking weakness across Asia and the U.S. futures market. Investor sentiment was also subdued following tragic domestic news over the weekend, adding to an already cautious tone.

Elsewhere in the region, markets struggled to find direction as traders balanced improving pockets of economic data against persistent concerns over global growth and tightening financial conditions.

Wall Street Sets a Cautious Tone

The subdued mood in Asia followed a pullback in U.S. markets on Friday. The S&P 500 fell 1.07%, retreating from record highs, while the Nasdaq Composite dropped 1.69%. The Dow Jones Industrial Average lost 0.51% after briefly touching a new intraday high earlier in the session.

AI-related stocks faced notable pressure, with Broadcom plunging more than 11%, dragging on both the broader market and the tech-heavy Nasdaq. Other high-profile names, including AMD, Palantir Technologies, and Micron, also posted declines.

Portfolio managers described the session as a shift toward value stocks and away from high-growth names, reflecting investor nervousness after a strong rally driven by AI optimism.

Outlook for Asian Markets

With key Chinese data continuing to disappoint and global investors reassessing exposure to technology stocks, Asia-Pacific markets may remain volatile in the near term. Much will depend on whether upcoming policy signals from Beijing can restore confidence in consumption and investment, as well as on the direction of U.S. equities.