Investing.com — Asian stocks mostly fell on Friday, marking a weak end to their first full trading week of 2025, as investors remained wary about the slowing pace of U.S. interest rate cuts and a potential hike by the Bank of Japan.
Weak inflation data from China, released earlier this week, also weighed on sentiment, as did growing speculation about President-elect Donald Trump's plans to impose trade tariffs against the country.
Regional markets tracked the losses incurred by their global counterparts, as hawkish signals issued by the Federal Reserve this week increased bets on a slowdown in the pace of monetary easing this year.
US stock index futures fell in Asian trading, with investors retreating ahead of the release of key data later in the day, which is likely to impact interest rate expectations.
Japanese stocks fall on speculation of interest rate hikes from the Bank of Japan
Japanese stocks headed in the red for a third straight day, as stronger-than-expected wages and private spending data fueled bets that the Bank of Japan may raise interest rates in January.
It fell 0.6%, while losing 0.5%. The two indices fell 1% and 2.2%, respectively, during the week.
The stronger-than-expected data reading for November comes just one day after data showed a larger-than-expected increase in .
The strong spending data comes as Japanese employers continue to benefit from significant wage increases achieved in early 2024.
Analysts said the strong spending took into account the Bank of Japan's expectations of a virtuous cycle of rising inflation, and could call for the central bank to raise interest rates by January.
This idea has taken hold, increasing pressure on Japanese stocks, especially those exposed to exports.
Chinese stocks are under pressure due to weak data and tariff tensions
The China and Hong Kong indexes fell by about 0.3% each, while the Hong Kong index remained flat.
All three indices suffered weekly losses, with the Hang Seng falling 2.2% after Tencent Holdings Ltd (HK:) – one of its largest constituents – was added to the US blacklist this week.
The addition – which was still being made under the Biden administration – raised concerns about how harsh US rhetoric against China will be when Trump takes office on January 20.
Sentiment towards China was further hurt by weak inflation data released this week, although the reading also prompted some bets on further stimulus measures from Beijing.
Broader Asian markets were largely negative, as risk appetite weakened ahead of US jobs data.
The Australian index fell by 0.6%, while the Singapore index fell by 1.5%.
South Korea's index stabilized amid ongoing political turmoil in the country, as authorities sought to arrest President Yeon Suk-yeol over his failed attempt to impose military law.
The Indian index pointed to a flat opening, with a series of major Indian corporate earnings scheduled for release in the coming days. But the index suffered sharp losses in recent weeks amid declining confidence in the Indian economy.
