Stocks across Asia opened lower on Monday as investors braced for the Federal Reserve's upcoming policy meeting, with Japanese equities leading losses amid renewed concerns over U.S. trade policy and volatility in U.S. markets. The yen strengthened to 142.30 per dollar.
- Nikkei 225 dropped 2.1% to 37,845.38
- Yen strengthened to 142.30 per USD
- Shanghai Composite down 0.9% to 3,127.51
- Hang Seng Index declined 1.3% to 19,410.25
- KOSPI fell 1.1% to 2,568.44
- 60% probability of Fed rate hold in December
Asian markets began the week on a cautious note, with Japanese equities bearing the brunt of early selling pressure. The Nikkei 225 index dropped 2.1% to close at 37,845.38, dragged down by sharp declines in export-oriented tech and automotive stocks. Investor sentiment was further dampened by signals of potential new U.S. tariffs on Japanese semiconductor and electric vehicle components, raising fears of escalating trade tensions. The yen strengthened to 142.30 against the U.S. dollar, marking its strongest level since October 2024. This rally was fueled by safe-haven demand amid ongoing volatility in U.S. equity markets, where the S&P 500 had posted a 2.4% decline in the prior session. The Dow Jones Industrial Average closed down 367 points, while the Nasdaq Composite lost 1.9%. Regional benchmarks reflected similar caution. The Shanghai Composite fell 0.9% to 3,127.51, while Hong Kong’s Hang Seng Index dropped 1.3% to 19,410.25, pressured by losses in property and financial sectors. South Korea’s KOSPI ended down 1.1% at 2,568.44, with semiconductor firms underperforming after a weak earnings report from a major memory chip manufacturer. Market participants are now focused on the Federal Reserve’s policy decision scheduled for Wednesday, December 10. With inflation data showing a slight rebound in November, expectations for a rate cut in December have diminished. Traders are pricing in a 60% probability of a pause, up from 45% a week earlier.