Asian equities ended mostly lower on Friday as investors took a cautious stance ahead of a pivotal week that includes US tariff decisions, major central bank meetings, and earnings reports from global tech giants.
Hang Seng pulls back after rally
The Hang Seng Index fell 1.1% to close at 25,388.35, halting a five-day, 4.8% rally that had pushed the benchmark to its highest level since November 2021.
The Hang Seng Tech Index mirrored the decline, also slipping 1.1%. China’s CSI 300 lost 0.5%, and the Shanghai Composite edged down 0.3%.
Tech names led the pullback in Hong Kong. Kuaishou Technology and Meituan both dropped more than 2%, while casino operator Sands China declined ahead of its interim earnings report later in the day.
Investors have been watching for clarity from a third round of trade negotiations between China and the US, scheduled for the weekend.
Market participants widely expect the two countries to extend the tentative 90-day tariff truce reached in April, but conviction appears to be fading in the absence of concrete progress.
Earnings results are also expected to provide directional cues as the reporting season begins, with Sands China’s numbers likely to set the tone.
Japanese stocks retreat after strong gains
In Japan, markets gave up some of their recent gains that had been fueled by optimism over US-Japan trade discussions.
The Nikkei 225 fell 0.88% to 41,456.23, while the broader Topix lost 0.86% to end at 2,951.86, a day after hitting a record high.
Losses were led by industrial and auto stocks. Yaskawa Electric dropped 6%, snapping a three-day winning streak, and Mitsubishi Motors plunged nearly 8% after reporting first-quarter operating profit that missed expectations.
Economic data out of Japan also weighed on sentiment. Tokyo’s consumer price index inflation eased more than expected in July, further complicating the Bank of Japan’s path toward policy normalisation.
The yen weakened following the data, reflecting diminished expectations for a near-term rate hike.
Other regional markets
South Korean stocks bucked the regional trend, with the Kospi index rising for a third consecutive session, up 0.18% to 3,196.05.
Gains were underpinned by stronger-than-anticipated earnings from Alphabet, which helped offset broader concerns around US trade policy.
Australian shares closed lower, with financial and mining stocks dragging down the broader market.
The benchmark S&P/ASX 200 declined 0.49% to 8,666.90, while the All Ordinaries Index fell by a similar margin to end at 8,934.30.
Wall Street on Thursday
Overnight, US markets ended on a mixed note.
The tech-heavy Nasdaq Composite rose 0.2%, and the S&P 500 closed marginally higher at a fresh record.
However, the Dow Jones Industrial Average dropped 0.7%, weighed down by declines in IBM and Tesla.
Economic data released on Thursday offered mixed signals. Weekly jobless claims declined unexpectedly, suggesting resilience in the labour market, while June’s new home sales held steady at subdued levels.
With upcoming decisions from the Fed and the BoJ, earnings from companies including Apple, Microsoft, and Amazon, and renewed China-U.S. trade talks, markets are bracing for a potentially volatile week.
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