Asian stock markets are trading jittery on Tuesday, reflecting the mixed performance in US markets overnight.
Most major markets in the region are closed for the Lunar New Year holidays, and traders remain cautious ahead of key monetary policy announcements from the Bank of Canada, the US Federal Reserve, and the European Central Bank later this week.
Markets in China, South Korea, Taiwan, and Indonesia are closed today due to the Lunar New Year holidays.
Nikkei continues to slip
In Japan, the stock market is sharply lower on Tuesday, continuing the downward trend from the previous two sessions.
The Nikkei 225 index is hovering just above the 39,000 level, weighed down by weakness in most sectors, particularly heavyweights and technology stocks.
Financial stocks are the only bright spot.
The Nikkei 225 Index closed the morning session at 39,340.15, down 225.65 points or 0.57%, after hitting a low of 38,886.05 earlier.
Among major stocks, SoftBank Group is down almost 6%. Automakers Honda and Toyota are seeing slight declines of 0.5% and 0.4%, respectively. In the tech sector, Advantest is down more than 9%, Tokyo Electron is losing over 5%, and Screen Holdings is down 3.5%.
Shares of Japanese semiconductor-related companies extended their losses on Tuesday after Monday’s selloff, driven by the release of the Chinese AI model DeepSeek.
The DeepSeek AI model said to be developed for under $6 million, has raised questions about whether smaller, cost-efficient AI models can disrupt the dominance of large-scale, capital-intensive projects from Silicon Valley.
Other regional markets
The Hang Seng Index opened Tuesday’s session with a 0.69% gain, rising 139.69 points to 20,337.46, marking its third consecutive day of positive movement.
However, the index moderated in the later hours of trading. At the time of writing, the Hang Seng index traded 0.20% higher at 20,237.99.
Technology stocks led the charge, with Tencent rising 1.3%, Alibaba up by 1.4%, and Meituan also gaining 1.4%. Xiaomi surged 2%, JD.com added 0.7%, and Kuaishou rose 1.1%.
In Australia, the stock market is trading relatively flat on Tuesday after gains in the previous session.
The benchmark S&P/ASX 200 index remains above 8,400, with gains in iron ore miners and financial stocks offset by weakness in gold miners, energy, and technology sectors.
US stocks buckle under DeepSeek pressure
U.S. stocks closed mostly lower on Monday, with tech stocks taking a severe beating.
The S&P 500 dropped 88.96 points, or 1.46%, finishing at 6,012.28, and the Nasdaq fell 612.47 points, or 3.07%, to 19,341.83.
However, the Dow Jones Industrial Average gained 289.33 points, or 0.65%, to close at 44,713.58.
Technology stocks faced notable losses, driven by concerns over earnings amid the emergence of DeepSeek, a Chinese AI startup.
Its AI Assistant overtook ChatGPT on Apple’s App Store, raising fears that the US AI leaders could face increasing competition.
DeepSeek’s rise cast doubt on Silicon Valley’s substantial AI investments and the future of the US’s technological edge in the field.
Wall Street was also weighed down by concerns about interest rates ahead of the Federal Reserve’s upcoming policy meeting.
While the central bank is expected to leave rates unchanged, investors are closely monitoring the accompanying statement for insights on future rate decisions.
Recent economic data has fueled concerns that rates could remain higher for an extended period, although many economists still anticipate rate cuts in the first half of the year.
The CME Group’s FedWatch Tool currently signals a 78% chance of a rate reduction of at least 0.25% by the Fed’s June meeting.
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