HONG KONG — Asian markets presented a mixed but largely subdued picture on Monday, as a wave of Lunar New Year holidays across the region led to thin trading volumes and cautious investor sentiment. The muted activity was compounded by disappointing economic growth data from Japan, which reinforced expectations for further fiscal stimulus .
With the first day of the Lunar New Year falling on Tuesday, stock markets in mainland China, South Korea, and Taiwan were completely closed for the holiday. Financial hubs Hong Kong and Singapore operated on half-day schedules, significantly reducing regional trading activity .
Japan’s Stalled Momentum
The focal point of the trading session was a sobering report on Japan’s economy. The government announced that the economy grew at an annualized rate of just 0.2% in the October-December quarter. This figure fell dramatically short of economist forecasts, which had predicted a 1.6% expansion .
The sluggish data highlights the ongoing fragility of the world’s fourth-largest economy and adds pressure on Prime Minister Sanae Takaichi to deliver on her promises of aggressive fiscal stimulus. Analysts suggest the weak report increases the likelihood of further government spending and potential tax cuts to reignite growth . In response, Tokyo’s Nikkei 225 index fluctuated, eventually settling 0.2% lower, while the broader TOPIX index declined more sharply .
Marcel Thieliant, head of Asia Pacific at Capital Economics, noted in a report that the sluggish growth “implies that the large supplementary budget passed at the end of November provided no boost to public spending last quarter just yet.” He added that this “increases the chances that Takaichi will not only press ahead with suspending the sales tax on food but enact a supplementary budget during the first half of the fiscal year” .
Hong Kong Gains in Shortened Session
In contrast to the regional lull, Hong Kong’s Hang Seng Index managed to post gains. The index rose 0.5% in its half-day session, closing at 26,705.94 . However, a separate report from the South China Morning Post indicated that the index had slipped in early trading, dragged down by profit-taking in tech heavyweights like Alibaba and Baidu, before recovering to close higher .
Elsewhere in the region, Australia’s S&P/ASX 200 managed a modest gain of 0.2%, while India’s Sensex also traded higher . Singapore’s Straits Times Index dipped slightly following weaker-than-expected non-oil export data .
Global Calm and Fed Watch
The subdued trading in Asia followed a period of stabilization on Wall Street. U.S. stocks calmed on Friday after a volatile week driven by concerns over massive capital expenditures in artificial intelligence and uncertainty about future returns .
Providing further support to global markets was a U.S. inflation report showing that consumer prices cooled slightly more than expected in January. Annual core inflation fell to 2.4%, its lowest level since March 2021, which analysts say keeps the door open for the Federal Reserve to consider interest rate cuts later this year . U.S. stock markets were also closed on Monday for the Presidents’ Day holiday, adding to the global quiet .
Commodities and Currencies
In the commodities market, precious metals came under fresh pressure. Gold prices fell 0.6% to $5,015.40 per ounce, retreating from recent highs, while silver also declined . Oil prices remained steady, with investors digesting reports regarding OPEC’s potential output plans .
On the currency front, the U.S. dollar strengthened slightly against the Japanese yen, trading at 153.19, as the weak GDP data tempered expectations for immediate interest rate hikes by the Bank of Japan .