Asian stock markets traded cautiously on Monday as investors positioned themselves ahead of the extended Lunar New Year holiday, while weaker-than-expected economic data from Japan dampened sentiment across the region.
Trading Activity Thins as Lunar New Year Approaches
Several major Asian bourses were shut or operating on shortened schedules due to the Lunar New Year celebrations.
Markets in Shanghai, Seoul and Taipei were closed, while Hong Kong and Singapore ended trading after half-day sessions. US markets were also closed in observance of Presidents’ Day, further limiting global trading momentum.
Tokyo’s benchmark Nikkei 225 slipped 0.2 percent to close at 56,806.41, while Hong Kong’s Hang Seng Index rose 0.5 percent to 26,705.94 before its early close.
Other regional markets showed mixed performances:
Wellington, Jakarta, Manila and Kuala Lumpur posted marginal losses
Sydney, Mumbai and Bangkok recorded modest gains
Singapore remained largely unchanged
Japan’s Weak GDP Growth Adds Pressure on Takaichi
Fresh data showed Japan’s economy expanded by just 0.1 percent in the final quarter of 2025, well below the 0.4 percent forecast by analysts.
The disappointing figures raise fresh concerns for Prime Minister Sanae Takaichi, whose recent landslide election victory was built largely on promises to revitalise economic growth.
Japan, the world’s fourth-largest economy, now faces mounting pressure to introduce stronger fiscal measures.
Marcel Thieliant of Capital Economics said the weak reading suggests the supplementary budget passed in November has yet to stimulate public spending.
He noted that sluggish activity could push Takaichi to accelerate plans to suspend the sales tax on food and potentially introduce another supplementary budget in the first half of the fiscal year beginning in April.
Markets Stabilise After Tech-Led AI Sell-Off
Despite Monday’s subdued trading, markets showed signs of stabilising following last week’s tech-driven downturn.
Investors had reacted nervously to growing concerns about the hundreds of billions of dollars poured into artificial intelligence infrastructure, questioning when — or if — meaningful returns would materialise.
Attention now shifts to the AI Impact Summit in New Delhi, where industry leaders including Sam Altman and Sundar Pichai are expected to speak.
The event comes at a time when generative AI continues to drive corporate profits and share prices higher, even as concerns mount about its societal and environmental impact.
Softer US Inflation Supports Rate Cut Hopes
Investor confidence received some support from US inflation data released Friday, which showed consumer prices cooling slightly more than expected in January.
The softer reading has strengthened expectations that the Federal Reserve could resume interest rate cuts later this year.
Kyle Rodda, senior market analyst at Capital.com, noted that headline and core inflation fell to their lowest levels in years, with the key core figure dropping to 2.4 percent — the lowest since March 2021.
However, analysts caution that policymakers will require sustained improvement before committing to additional rate reductions.
Gold, Oil and Currency Markets
Gold prices dipped below $5,000 an ounce after last week’s rally, as easing inflation tempered safe-haven demand. Silver fell one percent.
According to Standard Chartered, markets have priced in a higher probability of deeper Federal Reserve rate cuts this year, pushing real yields lower and underpinning gold demand.
In energy markets:
West Texas Intermediate crude was flat at $62.91 per barrel
Brent North Sea crude held steady at $67.75 per barrel
Currency markets saw:
Dollar/yen at 153.14
Euro/dollar steady at $1.1868
Pound/dollar flat at $1.3654
Key Market Figures (0710 GMT)
Tokyo – Nikkei 225: Down 0.2% at 56,806.41
Hong Kong – Hang Seng: Up 0.5% at 26,705.94
Shanghai Composite: Closed for holiday
New York – Dow Jones: Up 0.1% at 49,500.93
London – FTSE 100: Up 0.4% at 10,446.35
