Asian equities moved mostly higher on Wednesday, following Wall Street’s overnight gains, as technology stocks offered solid support.
Japan, however, underperformed after a Bank of Japan survey showed growing optimism among major manufacturers—fueling concerns that the central bank could move closer to an interest rate hike.
Trading activity across the region was lighter than usual, with markets in China and Hong Kong closed for National Day holidays. Mainland China is set to remain shut until mid-next week.
Attention also turned to the Reserve Bank of India’s policy decision, where expectations point to unchanged benchmark rates but further easing via liquidity measures.
Wall Street’s positive close provided some early momentum, but sentiment was capped by the looming threat of a U.S. government shutdown after funding negotiations stalled. S&P 500 futures slipped 0.4% in Asian hours, with the shutdown expected to begin at 0400 GMT.
Technology sector leads gains
Tech-heavy indices were the strongest performers. South Korea’s KOSPI rose 0.8%, mirroring gains in U.S. tech shares fueled by continued optimism over artificial intelligence and bargain hunting after September’s selloff.
Still, upside was curbed by uncertainty over U.S. interest rate policy after Dallas Fed President Lorie Logan, echoing several colleagues, signaled caution over aggressive rate cuts given the economy’s resilience.
Japan lags on tightening fears
Japan’s Nikkei 225 slid 1.1% and the TOPIX shed 1.8%, leading regional declines. Rising expectations of a BOJ rate hike weighed heavily, especially on exporters, after the central bank’s “tankan” survey highlighted stronger sentiment among large manufacturers.
The yen strengthened on the rate outlook, further pressuring export-focused equities. Markets now see late-October as a potential window for a BOJ policy shift.
Mixed regional picture
Elsewhere, Singapore’s Straits Times index added 0.6% with support from tech, while Australia’s ASX 200 slipped 0.3% following hawkish commentary from the RBA earlier in the week.
In India, Nifty 50 futures pointed to a subdued open as traders awaited the RBI’s policy decision. While rates are expected to remain unchanged, the bank is anticipated to ease liquidity conditions through a cash reserve ratio cut.