Markets across the Asia-Pacific region started the week on a mixed note as investors digested key economic data and developments. China’s service sector showed robust growth, while Japan’s Nikkei led regional losses.
China’s Services PMI Grows at Fastest Pace Since May 2024
China’s services sector expanded at its quickest pace in seven months, with the Caixin Services Purchasing Managers’ Index (PMI) rising to 52.2 in December, up from 51.5 in November. This growth was fueled by a rise in new business inflows, though export business declined for the first time since August 2023.
Despite the upbeat PMI data, China’s CSI 300 index fell 0.16% to 3,769, marking its fourth consecutive day of losses and hitting its lowest levels since late September 2024. The market seemed to shrug off the positive data, focusing instead on broader concerns about economic recovery.
China’s central bank announced over the weekend it would pursue a “moderately loose” monetary policy in 2025 to support growth, signaling further measures to sustain the country’s economy.
Hong Kong’s Slower Growth
Hong Kong’s business activity expanded at a slower pace in December, with its PMI reading at 51.1, slightly down from November’s 51.2. Subdued external demand weighed on growth, while concerns over potential U.S. tariffs on trade added to the cautious outlook for 2025.
The Hang Seng Index mirrored this sentiment, dropping 0.48% during its final trading hour.
India’s Service Sector Outpaces Expectations
India’s services sector showed strong performance, with its services PMI reaching 59.3 in December, the highest pace in four months. Though the final figure missed analysts’ expectations of 60.5, it highlighted continued strength in the sector. HSBC economist Ines Lam noted that forward-looking indicators such as new business and future activity suggest sustained momentum in the months ahead.
Japan’s Nikkei Falls Amid Consumer Sector Weakness
Japan’s Nikkei 225 tumbled 1.47% to close at 39,307.05, leading losses in the region. The Topix index also dropped 1.02% to 2,756.38. Consumer cyclical stocks dragged the benchmarks lower, as investors reacted to negative economic sentiment and the ongoing challenges in global demand.
Adding to the uncertainty, shares of Nippon Steel fell 2% following reports that the company may sue the U.S. government over its blocked purchase of U.S. Steel. The decision, attributed to national security concerns, has led to speculation about how this may impact Japanese companies’ overseas investments.
South Korea’s Kospi Rallies
In contrast to Japan’s losses, South Korea’s Kospi climbed 1.91% to 2,488.64, while the small-cap-heavy Kosdaq rose 1.73% to 717.96, its highest level since November 2024. The gains came despite political uncertainty surrounding impeachment proceedings against the country’s president, Yoon Suk Yeol.
Australia’s ASX 200 Remains Flat
Australia’s S&P/ASX 200 index ended just above the flatline at 8,257.4, as gains made earlier in the session were pared back. Investors remained cautious amid mixed signals from global markets.
Global Context
Asia’s mixed market performance follows a recovery in U.S. markets last Friday, where the S&P 500 and Nasdaq Composite ended their five-day losing streaks. The S&P 500 gained 1.26%, while the Nasdaq rose 1.77%, driven by a rally in tech stocks.
As global equity markets enter 2025, uncertainties around trade policies, geopolitical tensions, and macroeconomic concerns continue to shape sentiment. However, analysts like UBS’ David Lefkowitz are optimistic, projecting a 12.5% rise in the S&P 500 this year, supported by healthy profit growth.
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