Asian Markets Overview

Most Asian stocks fell on Tuesday, as uncertainty surrounding interest rates and the upcoming U.S. presidential election made traders risk-averse. In contrast, Chinese markets showed slight gains after an interest rate cut.

Wall Street Influence

Regional markets were affected by weak leads from Wall Street, where U.S. stock benchmarks pulled back from record highs amid rising Treasury yields as the earnings season approached. U.S. stock index futures were mildly negative during Asian trade.

As the U.S. presidential elections are just two weeks away, investors are keenly observing. Recent polls indicated that Republican nominee Donald Trump might have improved odds against Vice President Kamala Harris.

Attention this week is also directed towards key U.S. earnings reports, with Asian earnings anticipated to gather momentum in the following weeks.

Japan's Market Performance

Japan’s Nikkei 225 suffered the most in Asia, plummeting 1.7%, while the TOPIX index decreased by 1.1%. This drop happened despite a weaker yen, which typically benefits export-focused Japanese stocks.

The yen, nearing its lowest value in nearly three months, faced pressure due to uncertainty around the Bank of Japan’s potential interest rate increases. Notably, general elections in Japan are scheduled for later this month, and the BOJ’s meeting is set for the end of October. Inflation data from Tokyo, due later this week, is expected to influence the outlook for Japanese interest rates.

Broader Asian stocks retreated, with South Korea’s KOSPI down over 1% and Australia’s ASX 200 losing 1.4% amid significant profit-taking after reaching record highs earlier this month. In India, futures for the Nifty 50 index indicated a flat opening, amid profit-taking and mediocre earnings from key Indian companies.

Chinese Market Gains

Chinese markets outperformed others in Asia, with the Shanghai Shenzhen CSI 300 and Shanghai Composite indexes rising between 0.2% and 0.3% in unpredictable trading. Hong Kong’s Hang Seng index also increased by 0.4%.

The rise in Chinese stocks was supported by a larger-than-anticipated cut to the People’s Bank of China’s benchmark loan prime rate announced on Monday, part of recent stimulus measures aimed at strengthening economic growth. While this optimism initially propelled Chinese markets to two-year highs in October, uncertainties about the measures' timing and scale have since tempered those gains.