Maxco Futures – Asian equities weakened on Tuesday, following a mixed session on Wall Street, as regional investors locked in profits after an extended rally amid rising uncertainty over the direction of global monetary policy.
Japan’s Nikkei 225 fell 1.7% to 51,497.20 after hitting a record high last week, while South Korea’s Kospi slumped 2.4%, dragged down by profit-taking in tech shares. Australia’s S&P/ASX 200 edged 0.9% lower, and Hong Kong’s Hang Seng slipped 0.6%. On the mainland, the Shanghai Composite dropped 0.4% amid weak domestic investor appetite.
The correction in Asia came after U.S. tech heavyweights once again led gains on Wall Street. Nvidia Corp. rose 2.2%, while Amazon.com Inc. jumped nearly 4% after announcing a US$38 billion deal with OpenAI to utilize Amazon Web Services’ cloud infrastructure for AI workloads.
Optimism surrounding artificial intelligence continues to be a key driver of global sentiment, though some analysts warned that tech stock valuations are now entering overbought territory.
“The market in Asia is starting to run out of steam after an overly rapid rally, while U.S. investors remain highly optimistic about growth in the AI sector,” said a market analyst in Singapore.
Meanwhile, U.S. economic data showed that manufacturing activity contracted more sharply than expected in October, adding to signs that the economy’s momentum is slowing. However, U.S. Treasury yields remained elevated, keeping the U.S. dollar in a strong range.
Market participants are now awaiting further remarks from Federal Reserve officials, looking for fresh signals on the timing of the next interest rate cut, following last week’s hawkish comments from Fed Chair Jerome Powell.
Overall, Tuesday’s trading reflected a cautious rotation in global markets, with investors balancing AI-driven euphoria on Wall Street against the need to secure profits in Asia, where several benchmarks recently touched record highs.
Ade Yunus, ST WPA
Global Market Strategies