Asian equities stumbled on Monday as investors locked in profits from Japanese chipmakers, while China markets continued to ride optimism over homegrown AI development. Thin liquidity from the U.S. Labor Day holiday kept moves in check, but the week ahead is loaded with data that could set the tone for global markets.
Japan Weakens, China Defies the Trend
Japan’s Nikkei 225 fell 1.6%, dragged by a 9% slide in Advantest, which has rallied nearly 50% in the past three months.
South Korea’s Kospi slipped 0.7%, while Indonesia’s market dropped 1.5% after political protests pressured the rupiah.
In contrast, China’s CSI 300 gained 0.4%, extending a 10% August surge as domestic AI enthusiasm and easy liquidity continue to fuel demand.
Alibaba (9988.HK) soared 19% in Hong Kong, its best one-day rally since early 2022, on renewed optimism over its cloud business. Reports also said AI firm DeepSeek opted for Huawei chips in training models, underscoring China’s push to reduce reliance on U.S. technology.
US Data, Fed, and Tariff Overhang
With Wall Street closed, attention turned to this week’s U.S. labor data. The August jobs report is expected to show +75,000 payrolls and a tick up in unemployment to 4.3%.
Analysts caution the report often undershoots expectations, meaning a soft print could all but cement a September Fed rate cut. Futures now price in a ~90% probability of easing.
Trade risks linger after a federal appeals court ruled most of President Trump’s emergency tariffs illegal, though they remain in place until mid-October pending a Supreme Court appeal. Talks with Japan and South Korea remain bogged down.
Commodities and FX
- The U.S. dollar fell 2.2% in August and remained under pressure Monday, trading near 97.79. The euro edged up 0.3% to $1.1710, while the yen held at 146.9.
- Gold extended gains to a four-month high at $3,481/oz, boosted by weaker dollar and rate-cut bets.
- Oil slipped, with Brent down 0.4% to $67.21 and WTI down 0.4% to $63.78, ahead of OPEC+ output increases.
Asia started September on a cautious footing. Japanese chip stocks finally saw profit-taking, while China’s market kept climbing on AI momentum. With U.S. markets shut, the focus now shifts squarely to jobs data, Fed policy, and the looming Supreme Court fight over tariffs—factors that could make this already volatile month even bumpier.
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