Summary
Asian stocks closed mixed on Tuesday as declines in technology names tracked overnight losses on Wall Street and traders parsed fresh Japanese GDP data while monitoring developments in the Middle East. Futures in the U.S. were also slightly lower in Asian trading.
Key points
- Japan's annualised Q1 GDP expanded 2.1%, above the 1.7% forecast, supported by stronger private consumption and external demand.
- Technology shares led losses regionally after Wall Street weakness and ahead of Nvidia's quarterly results.
- Oil prices eased after reports that planned U.S. strikes on Iran were paused, but crude remained high amid Strait of Hormuz supply risks.
Risks and uncertainties
- Potential disruption to semiconductor production in South Korea if strike action at Samsung proceeds, affecting tech supply chains.
- Elevated oil prices and supply disruptions in the Strait of Hormuz that can sustain inflationary pressures and weigh on markets sensitive to energy costs.
- Profit-taking around AI-linked chip stocks ahead of key earnings could prolong weakness in technology sectors.
Market overview
Technology-heavy losses on Wall Street filtered into Asian trading, with the Nasdaq ending lower overnight amid concerns about inflation driven by higher oil. U.S. stock index futures were marginally down in Asia. Profit-taking hit AI-related chip names as investors positioned ahead of Nvidia's (NVDA) quarterly report due on Wednesday, viewed as a crucial test for the AI-driven rally's durability.
Japan data and market reaction
Japan reported an annualised GDP growth rate of 2.1% for the first quarter, above consensus expectations of 1.7%. The expansion was driven by firmer private consumption and stronger external demand. Capital expenditure rose 0.3% quarter-on-quarter, and the GDP price index climbed 3.4%, underlining persistent inflationary pressure. Despite the stronger-than-expected Q1 outturn, analysts cited in market commentary expect GDP growth to stall in the current and following quarter. In market moves, the Nikkei 225 slipped about 0.4% while the broader TOPIX gained roughly 0.5%.
Oil and geopolitical headlines
Oil eased modestly after U.S. President Donald Trump said he had paused a planned military strike on Iran and noted there was "a very good chance" of reaching a nuclear agreement with Tehran. Brent crude retreated from recent levels above $110 per barrel but remained elevated amid ongoing supply disruptions in the Strait of Hormuz.
Regional stock moves
The pause in military action contributed to gains in some markets: Australia's S&P/ASX 200 jumped 1.1% and Singapore's Straits Times Index rose 0.6%. However, most major bourses were subdued with technology shares weighing on performance. China's blue-chip CSI 300 fell 0.6%, the Shanghai Composite traded flat, and Hong Kong's Hang Seng was largely unchanged. Futures tied to India's Nifty 50 edged down about 0.3%.
South Korea and Samsung
South Korea's KOSPI traded roughly 3% lower after an earlier drop of as much as 5% in the session. Samsung Electronics (KS:005930) shares fell more than 5% as the company and its labour union resumed negotiations following talks a day earlier that did not produce an agreement. Investors expressed caution about the risk of a planned strike later this week that could disrupt semiconductor production. Reports noted a South Korean court had warned the union of fines if it failed to comply with court orders related to industrial action.
Market implications
The session underscored the market's sensitivity to tech earnings calendars, supply-chain labour risks in critical technology hubs, and geopolitical developments that influence energy prices and inflation expectations.