Asian stock markets declined on Friday, tracking a weak overnight performance on Wall Street, where losses in major U.S. technology stocks weighed heavily on global risk sentiment. Investor appetite for risk cooled after a sharp drop in U.S. equities, while attention in Asia also turned to inflation data from Tokyo that kept expectations for further Bank of Japan (BOJ) policy tightening in focus.
Several Asian benchmarks, which had climbed to record or multi-year highs earlier in January, pulled back as investors locked in profits. Chinese and Hong Kong shares led the regional declines, reflecting a broader shift toward caution following the U.S. market sell-off.
Overnight in the United States, stocks closed decisively lower. The S&P 500 and Nasdaq retreated as technology shares came under pressure, led by a steep fall in Microsoft. Shares of the software giant plunged nearly 10% after investors questioned whether heavy spending on artificial intelligence would translate into near-term profits. Weaker-than-expected cloud growth further added to concerns around big-tech valuations.
U.S. stock index futures remained slightly in the red during Asian trading hours, reinforcing the negative lead from Wall Street and setting a cautious tone for regional markets.
U.S. Tech Sell-Off Ripples Through Asian Markets
The downturn in U.S. equities quickly spilled over into Asia, with technology stocks facing renewed selling pressure across the region.
In China, the blue-chip CSI 300 and the Shanghai Composite index each fell more than 1%, as investors trimmed exposure following strong recent gains. Hong Kong’s Hang Seng Index slid nearly 2%, while the Hang Seng TECH sub-index posted similar losses, mirroring weakness seen in U.S. tech stocks. Despite the decline, Hong Kong equities were still on track to gain more than 7% for January.
Singapore’s Straits Times Index eased 0.2% after touching a record high earlier in the session, though the benchmark remained poised for a solid monthly gain of around 6%. Australia’s S&P/ASX 200 fell 0.6%, but was still set to rise roughly 2% for the month. Futures linked to India’s Nifty 50 index edged 0.3% lower.
Korea Outperforms on Strong Chip Earnings
Amid the regional weakness, South Korean stocks bucked the trend. The KOSPI gained 0.5%, supported by strong performances in heavyweight semiconductor stocks. SK Hynix and Samsung Electronics extended gains after posting strong earnings results a day earlier, highlighting resilient demand in the global chip sector.
The KOSPI was on track for an outstanding monthly gain of nearly 25%, making it one of the best-performing markets in Asia for January.
Tokyo Inflation Data Keeps BOJ Policy in Focus
In Japan, stocks edged lower as investors weighed domestic inflation data alongside global market pressures. The Nikkei 225 slipped 0.4%, while the broader TOPIX fell 0.3%. Even so, the Nikkei remained set for gains of more than 5% in January, although a stronger yen limited upside.
Data showed that consumer inflation in Tokyo eased to its lowest level in nearly four years, signaling a cooling in price pressures. However, the core inflation measure — which excludes fresh food and is closely watched by the BOJ — also eased but stayed slightly above the central bank’s 2% target.
This kept expectations for near-term BOJ policy tightening alive, leaving Japanese markets sensitive to further inflation data and signals from policymakers.
