Asian Stocks Decline Due to Rate and Tech Concerns; China Shares Make Strong Comeback

Most Asian markets experienced declines on Tuesday, following a downturn on Wall Street, where a robust U.S. job market raised expectations for sustained high interest rates.

In contrast, Chinese markets significantly outperformed their regional counterparts, rising sharply as trading resumed after a week-long break, driven by a wave of stimulus declarations from Beijing.

The general weakness in other Asian markets stemmed from Wall Street’s steep drop, as traders began to adjust their expectations for a smaller interest rate cut in November. U.S. stock index futures exhibited little movement during Asian trading hours.

Technology stocks across Asia faced the largest declines on Tuesday, closely following the weaknesses seen in their U.S. counterparts amid regulatory concerns and negative commentary from analysts.

### Chinese Markets Surge on Stimulus Measures

The Shanghai Shenzhen CSI 300 and Shanghai Composite indexes saw increases of between 6% and 8% in early trading, with peaks reaching as high as 13%. The resumption of trading after the Golden Week holiday saw investors enthusiastically entering the Chinese markets, reacting positively to significant stimulus initiatives from the Chinese government aimed at invigorating economic growth.

Chinese officials are slated to hold a briefing later on Tuesday to provide details on their plans for implementing further stimulus efforts. Before the Golden Week holiday, the government had announced a series of measures, including interest rate cuts, reduced reserve requirements for banks, relaxed property market regulations, and liquidity enhancements targeted at the stock market.

Investor sentiment in China was also bolstered by bargain hunting, as benchmark indexes had recently dipped to a seven-month low in September. However, there remained a keen interest among investors for additional targeted fiscal measures.

### Broader Asian Declines Amid Interest Rate Uncertainty and Tech Sector Losses

Excluding China, broader Asian markets took a hit on Tuesday, mirroring Wall Street’s downturn. U.S. stocks experienced a significant fall on Monday, prompted by strong labor market data that bolstered expectations for a slower pace of rate cuts by the Federal Reserve.

The losses were particularly evident in the technology sector, with major U.S. companies such as Alphabet, Apple, and Amazon facing declines on Monday.

The Hang Seng index in Hong Kong dropped nearly 4% on Tuesday, as profit-taking occurred following a surge to over a one-year high fueled by optimism regarding Chinese stimulus measures.

Japan’s Nikkei 225 index fell by 1.2%, while the TOPIX index declined by 1.1%. Recent data indicated a slowdown in wage growth for August, although Japanese household spending remained robust, potentially supporting inflation expectations.

In South Korea, the KOSPI index lost 0.7%, impacted by a 1.5% decrease in shares of Samsung Electronics after the company forecasted weaker-than-anticipated third-quarter profits. Its competitor, SK Hynix, experienced a drop of more than 2%.

In Australia, losses in the ASX 200 index were mitigated by positive sentiment surrounding China, given the country’s significant trade ties with the largest economy in Asia. Additionally, separate data indicated an improvement in Australian consumer sentiment for October.