Asian stocks skittish ahead of data packed-week, Japan’s Nikkei falls

Most Asian stocks traded within a flat-to-lower range on Monday, reflecting cautious sentiment ahead of key economic indicators scheduled for release this week. Japan’s Nikkei 225 retreated from its record highs, contributing to the overall subdued mood in the region.

Market sentiment was influenced by a mixed performance on Wall Street, where U.S. stock indexes closed slightly lower on Friday. U.S. stock futures showed little movement during Asian trading hours, with investors anticipating speeches from Federal Reserve officials and upcoming inflation data.

The Nikkei 225 index was the weakest performer in Asia, declining by 0.7% as investors took profits following recent record highs. Similarly, the broader TOPIX index also dropped by 0.7%.

Despite reaching new peaks last week, the Nikkei was weighed down by concerns about potential further tightening of monetary policy in Japan, particularly in response to recent inflation data. Market participants are awaiting additional inflation figures from Japan later this week, which are expected to influence the Bank of Japan’s policy outlook.

In China, the Shanghai Shenzhen CSI 300 and Shanghai Composite indexes each fell by 0.1% on Monday, extending losses from the previous session. Investors were wary of escalating tensions with the U.S., particularly regarding potential export restrictions targeting the technology sector. Reports indicating directives from Beijing to limit the use of certain foreign technologies added to the negative sentiment.

Despite these concerns, Hong Kong’s Hang Seng index managed to edge up by 0.3%, buoyed by gains in sectors beyond technology. Food delivery app Meituan emerged as one of the top performers on the Hang Seng, posting nearly an 8% increase in its stock price after beating quarterly earnings expectations.

Elsewhere in Asia, markets were mostly subdued. South Korea’s KOSPI index fell by 0.1%, while Malaysian stocks led losses in Southeast Asia with a 0.5% decline. However, Australia’s ASX 200 index bucked the trend, rising by 0.6% due to strength in mining and banking stocks. Key inflation data from Australia is also anticipated later this week.

Indian markets remained closed for a holiday, contributing to the subdued trading activity across the region.