Asia Markets Slide as Investor Caution Grows Ahead of U.S. Data

China and Hong Kong stocks saw declines across sectors, influenced by fragile regional sentiment ahead of upcoming U.S. data releases. The Shanghai Composite Index fell 1.1%, with significant losses in rare earth, new energy, and AI sectors. Analysts caution markets may remain range-bound without strong catalysts.

Stocks in China and Hong Kong continued to decline on Tuesday, affecting Asian markets as a whole, as investors grew wary ahead of significant U.S. data releases. The Shanghai Composite Index dipped 1.1% by market close.

Sector-wide weaknesses were noted with the rare earth sector dropping by 2.9%, new energy shares falling 2.4%, and the artificial intelligence sector losing 2.5%, amid concerns of overheating. Analysts from Nanhua Futures suggest the market might remain stagnant without strong catalysts, warning that upcoming U.S. data could influence rate cut expectations and add volatility.

Offering a slight lift, the CSI Intelligent Vehicle Index rose 0.4% after regulatory approval of two Chinese cars with advanced autonomous driving features. However, the Hang Seng China Enterprises Index fell 1.8%, with the broader Hang Seng Index also decreasing by 1.5% as regional sentiment remained cautious.

(With inputs from agencies.)