Asian stocks traded mostly lower on Tuesday as investors assessed Wall Street’s technology-driven gains amid growing concerns over a potential tech bubble. Caution prevailed across markets following mixed messages from U.S. Federal Reserve officials regarding future interest rate decisions.
Japan’s Nikkei declined 188 points, or 0.36%, to 52,222 at 9:30 AM IST. China’s Shanghai and Shenzhen indices also slipped by 0.19% and 1.27%, respectively, while South Korea’s Kospi dropped 1.62% to 4,153.
In contrast, Hong Kong’s Hang Seng Index rose 45 points to 26,203, supported by selective buying in major technology and financial shares.
The global tech sector has seen a surge this year, fuelled by heavy investment in artificial intelligence and expectations of lower borrowing costs. Valuations have climbed to record highs amid optimism over easing trade tensions following U.S. President Donald Trump’s tariff announcement in April.
Analysts warn that much of the rally appears driven by investor enthusiasm rather than fundamentals, increasing the risk of a sharp correction.
Adding to the momentum, OpenAI, the creator of ChatGPT, announced a $38 billion deal with Amazon Web Services, expanding its network of partnerships that already includes Oracle, Broadcom, AMD, and Nvidia.
On Wall Street, the Nasdaq and S&P 500 ended higher on Monday, lifted by tech stocks, while the Dow Jones Industrial Average slipped into negative territory.
Asian markets struggled to maintain that momentum. Gains were recorded in Hong Kong, Wellington, Manila, and Jakarta, while Tokyo, Sydney, Singapore, Seoul, and Taipei ended lower. Shanghai remained largely unchanged.
Investor sentiment was further weighed down by comments from Federal Reserve officials. Fed Chair Jerome Powell recently cautioned that a third interest rate cut this year was not assured, despite two reductions already enacted.
Meanwhile, Governor Lisa Cook noted that inflation could remain elevated as new tariffs work through supply chains, with some companies opting to absorb costs rather than raise consumer prices immediately.
Fresh U.S. economic data added to the unease, showing that manufacturing activity contracted for an eighth consecutive month in October as demand and output continued to weaken. The mixed signals from the Fed and slowing economic indicators left investors wary, leading to subdued trading across most Asian markets.
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