Asian markets were subdued on Monday as the extended Lunar New Year holiday approached, coupled with disappointing economic data out of Japan.
Trading floors were closed in Shanghai, Seoul, and Taipei, while Hong Kong and Singapore closed after half-day sessions. US markets were also shuttered for Presidents’ Day.
Japan’s economy expanded just 0.1 percent in the last quarter of 2025, well below market expectations of 0.4 percent. The weak growth dampens the post-election momentum of Prime Minister Sanae Takaichi, who pledged to boost the economy following her landslide February 8 snap election win.
“The data imply that the large supplementary budget passed at the end of November has yet to stimulate public spending,” said Marcel Thieliant of Capital Economics. “Sluggish growth increases the likelihood that Takaichi may move to suspend the sales tax on food and introduce a supplementary budget earlier than planned.”
Tokyo’s Nikkei 225 closed down 0.2 percent at 56,806.41, while Hong Kong’s Hang Seng Index rose 0.5 percent ahead of early Lunar New Year closures. Other Asian markets posted mixed results: Wellington, Jakarta, Manila, and Kuala Lumpur saw marginal losses; Sydney, Mumbai, and Bangkok gained slightly; Singapore remained mostly flat.
Markets showed signs of stabilising after last week’s tech-led sell-off, triggered by concerns over the vast investments in AI infrastructure and the uncertain returns. Investor focus turns to artificial intelligence this week as the five-day AI Impact Summit begins in New Delhi, featuring speakers including Sam Altman and Sundar Pichai. While generative AI has boosted profits and stock prices for many tech firms, worries persist over its societal and environmental risks.
Sentiment was also supported by US inflation data released Friday, showing consumer prices cooling slightly more than expected in January. Analysts say this could pave the way for potential interest rate cuts later this year, though sustained improvement is needed.
“US inflation data was good. But the devil is in the details,” said Kyle Rodda, senior analyst at Capital.com. “Annual headline and core inflation fell to new lows, with core inflation dropping to 2.4 percent, the lowest since March 2021.”
Precious metals reacted to the inflation data: gold slipped below $5,000 an ounce after Friday’s gains, while silver fell 1 percent. Standard Chartered noted that lower real yields and expectations of deeper Fed rate cuts could continue to support gold.
Key Figures (around 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
- Dollar/Yen: UP at 153.14 from 152.71
- Euro/Dollar: FLAT at $1.1868
- Pound/Dollar: FLAT at $1.3654
- Euro/Pound: DOWN at 86.97p from 86.96p
- WTI Crude: FLAT at $62.91 per barrel
- Brent Crude: FLAT at $67.75 per barrel
- New York – Dow: UP 0.1% at 49,500.93
- London – FTSE 100: UP 0.4% at 10,446.35
AFP
