Asian equities opened sharply lower on Tuesday, extending losses from Wall Street, as investors turned cautious ahead of key US employment and inflation data that could shape the Federal Reserve’s interest rate path in early 2026.
Markets across the region retreated after months of a strong, technology-driven rally, with concerns growing over stretched valuations in tech stocks and uncertainty around future rate cuts in the US.
Hong Kong’s Hang Seng Index fell 489 points, or 1.91 per cent, to trade at 25,139. Japan’s Nikkei slipped 673 points, or 1.34 per cent, to 49,494. Mainland Chinese markets were also under pressure, with the Shanghai Composite down 1.22 per cent and the Shenzhen index sliding 1.88 per cent. South Korea’s Kospi dropped 73 points to trade at 4,016 as of 10:05 am IST.
Market participants appear to be adopting a wait-and-watch stance after heavy inflows into artificial intelligence-linked stocks earlier this year. Analysts say the rally has slowed as investors reassess whether earnings growth can justify current valuations, especially if monetary easing in the US pauses.
Attention is now firmly on the US November jobs report, along with delayed employment data for October, scheduled for release later on Tuesday. These numbers will be followed by the US consumer price index data on Thursday, which is expected to offer further clarity on inflation trends. Together, the reports are likely to influence expectations around the Federal Reserve’s next moves on interest rates.
Federal Reserve officials have sent mixed signals on the outlook. Governor Stephen Miran has said interest rates remain too high, while New York Fed President John Williams has described current rates as “about the right place.” Boston Fed President Susan Collins termed the policy decision a “close call,” according to AFP.
The cautious sentiment also weighed on cryptocurrencies, with bitcoin falling to $85,171. In contrast, traditional safe-haven assets found support. Gold rose above $4,300, moving closer to record highs, as investors sought shelter amid market uncertainty.
Meanwhile, the Japanese yen strengthened against the US dollar ahead of the Bank of Japan’s policy meeting on Friday, where markets expect a rate hike, adding another layer of focus to global monetary policy developments.
