Asia report: Markets fall on mixed signals, RBA holds rates

4th Nov 2025 10:35

(Sharecast News) - Asia-Pacific equities fell on Tuesday as investors digested mixed economic signals and the Reserve Bank of Australia's policy decision.

The region's decline came despite overnight gains on Wall Street, where tech shares rallied following Amazon's $38bn deal with OpenAI and Nvidia secured export clearance for shipments to the United Arab Emirates.

Patrick Munnelly at TickMill noted that "US stock futures took a dip, reflecting a cautious mood on Wall Street as investors reevaluated the high valuations of tech stocks and mulled over mixed messages from Federal Reserve officials."

He added that "Nasdaq 100 futures saw a sharper drop of 1.2%, with Palantir Technologies losing more than 4% in after-hours trading as concerns over its lofty valuation reemerged after a record-setting rally."

Markets in the red across the region

In Japan, the Nikkei 225 dropped 1.74% to 51,497.20, led lower by steep losses in chip-related and technology names, with Socionext plunging 20.05%, Screen Holdings down 12.43%, and Nomura Research losing 9.35%.

The broader Topix index slipped 0.65% to 3,310.14.

The yen strengthened after Japan's finance minister issued another warning on currency moves, which Munnelly said "helped the currency gain strength as traders trimmed long dollar positions."

Chinese markets also weakened, with the Shanghai Composite down 0.41% at 3,960.19 and the Shenzhen Component falling 1.71% to 13,175.22.

Losses were broad-based, with Shanghai Huide Science & Technology tumbling 10%, China Merchants Energy Shipping off 9.54%, and Ningbo Shanshan down 7.86%.

Hong Kong's Hang Seng Index declined 0.79% to 25,952.40, weighed by a 5.36% drop in Zijin Mining Group, a 4.59% fall in Sunny Optical Technology, and a 4.42% slide in CSPC Pharmaceutical.

Munnelly observed that "Asian equities fell 0.8% overall, with regulators in South Korea issuing a rare 'investment caution' on SK Hynix, whose stock has skyrocketed 240% this year," underscoring growing concern about overheating in regional tech shares.

South Korea's Kospi fell 2.37% to 4,121.74, snapping a four-session winning streak that had seen the index touch multiple record highs this month.

Hyosung plunged 13.36%, HD Hyundai Marine Engine lost 7.1%, and Hyundai Mipo Dockyard fell 6.88%.

The pullback came after the government unveiled plans to triple AI spending to KRW 10.1trn (£5.38bn) in 2026, as president Lee Jae Myung said the goal was to make South Korea one of the world's top three AI powers.

Meanwhile, inflation accelerated in October to 2.4% year-on-year, its fastest pace since July 2024, raising pressure on the Bank of Korea to hold off on further monetary easing.

The weaker won - down nearly 1.9% against the dollar last month - added to import-driven inflation, particularly for energy and food.

In Australia, the S&P/ASX 200 fell 0.91% to 8,813.70 after the Reserve Bank of Australia left its cash rate unchanged at 3.6%, as expected.

The RBA warned inflation would remain higher than previously forecast, with governor Michele Bullock saying some of the recent price pressures could prove temporary, but warranted caution.

Wam Leaders dropped 6.5%, AP Eagers lost 5.43%, and Brambles fell 5.26%.

Munnelly said "the Australian dollar weakened after the Reserve Bank of Australia held interest rates steady," adding that markets now saw "little chance of a near-term rate cut given the central bank's warning that inflationary pressures could persist into next year."

Economists said the decision effectively ruled out any rate cut at the central bank's final meeting of the year in December, and some even suggested the next move could be an increase if inflation persisted.

Across the Tasman Sea, New Zealand's S&P/NZX 50 index eased 0.37% to 13,605.96, with Vista Group International down 5.28%, KMD Brands off 3.45%, and Serko falling 2.66%.

Regional currencies mixed as oil prices slip

In currencies, the yen strengthened 0.47% to JPY 153.49 to the dollar, while the Australian and New Zealand dollars weakened 0.56% and 0.7%, respectively.

The greenback, Munnelly said, "extended its winning streak to a fifth session, climbing to its highest level since August against most major currencies," as traders digested conflicting signals from Federal Reserve officials.

In commodities, Brent crude futures were last down 1.4% on ICE at $63.98 per barrel, and the NYMEX quote for West Texas Intermediate dropped 1.59% to $60.08, as "oil prices fell following OPEC+'s decision to pause production hikes," Munnelly noted.

Reporting by Josh White for Sharecast.com.