On Tuesday, most Asian stocks experienced a retreat as caution lingered ahead of significant economic data releases later in the week. Japan's Nikkei 225 saw a decline from its record highs, influenced by a slightly stronger-than-expected inflation print.
The regional markets took cues from a moderate close on Wall Street, where the previously robust tech-driven rally appeared to be slowing down. US futures showed limited movement during Asian trading on Tuesday.
Japan's Nikkei 225 index traded marginally lower after hitting record highs earlier in the day, influenced by the consumer price index data for January, which fell slightly less than anticipated.
Although the reading eased compared to the previous month, it fueled concerns that the Bank of Japan might consider ending its yield curve control and negative interest rate policies by April.
The ultra-dovish stance of the Bank of Japan had been a crucial support for Japanese markets over the past year, attracting foreign investors to local stocks.
However, the sharp increase in valuations also heightened the vulnerability of Japanese stocks to negative news, especially as Japan's economy faces an unexpected recession. Nevertheless, the broader TOPIX index rose by 0.7% and reached a record high.
Across broader Asian markets, there was a retreat in anticipation of key inflation and business activity readings later in the week. Australia's ASX 200 index fell by 0.3%, with attention turning to the monthly inflation reading for January scheduled for Wednesday.
South Korea's KOSPI declined by 0.5%, marking a second consecutive session of losses as investors engaged in profit-taking in technology stocks.
Futures for India's Nifty 50 index suggested a slightly weak open, aligning with other Asian markets, as the index experienced extended profit-taking after reaching record highs last week.
Broader sentiment was dampened by expectations of U.S. PCE price index data later in the week, which is the Federal Reserve's preferred inflation gauge and is anticipated to impact the outlook for U.S. rates, a contentious point for Asian markets.
In China, the Shanghai Shenzhen CSI 300 and Shanghai Composite indexes traded in a flat-to-low range on Tuesday, remaining cautious after interrupting an eight-session rally in the previous session.
Losses in mainland and tech stocks also contributed to a 1% decline in Hong Kong's Hang Seng index.
Despite recent stimulus measures from Beijing aiding a rebound in Chinese markets from multi-year lows, investors are now looking for concrete signs of improvement in the economy.
Purchasing managers index data for February, expected later in the week, is anticipated to provide clearer insights into Asia's largest economy.
Paraphrasing text from "Investing" all rights reserved by the original author.
