Asia stocks muted amid rate caution; China dips as tech reverses course

Investing.com-- Most Asian stocks were rangebound on Tuesday, cooling after recent gains as mixed signals on U.S. interest rates and a crackdown on work visas by President Donald Trump spurred heightened caution. 

Chinese stocks led losses in the region as local technology stocks retreated from a stellar rally over the past month. Hong Kong shares were especially hit by this trade. 

Regional trading volumes were subdued on account of a Japanese holiday, while investors kept to the sidelines in anticipation of several key U.S. economic prints this week.

Asian markets took some positive cues from a strong overnight close on Wall Street, with U.S. stocks hitting record highs on gains in Nvidia and Apple. But this momentum was also seen fading into the Asian session, with S&P 500 Futures flat in regional trade. 

Risk aversion also remained squarely in play, with gold prices hitting fresh record highs in Asian trade. 

Taiwanese NVIDIA (NASDAQ:NVDA) and Apple (NASDAQ:AAPL) suppliers TSMC (TW:2330) and Hon Hai Precision Industry Co Ltd (TW:2317) (Foxconn) were outliers in Asia, rising around 2% each. Nvidia on Monday announced a $100 billion investment in OpenAI, sending its shares higher by nearly 4%, while optimism over improving iPhone demand boosted Apple shares. 

Asia stocks hit by caution over US rates, Trump work visa crackdown 

South Korea’s KOSPI rose 0.3%, taking some support from tech shares, while Singapore’s Straits Times index was flat. 

Australia’s ASX 200 rose 0.5% as local miners were boosted by stronger metal prices. This helped markets look past weak purchasing managers index data for September, which showed growth in both manufacturing and services slowed. 

Investors turned cautious after several Federal Reserve officials signaled on Monday that the central bank may not need to cut interest rates further after a cut last week. Their comments came just before an address by Fed Chair Jerome Powell later on Tuesday.

Beyond Powell, several key economic prints from the U.S. are also on tap this week, including PCE price index data, the Fed’s preferred inflation gauge. 

Futures for India’s Nifty 50 index fell 0.2%, with the index set for extended losses after Trump unveiled a steep fee for new H-1B work visas.

Indian tech names such as Infosys Ltd (NSE:INFY), Wipro Ltd (NSE:WIPR), and Tata Consultancy Services Ltd. (NSE:TCS), had tumbled on news of the fine, given that they depend heavily on the H-1B system to rotate their talent into U.S. projects. 

Trump’s H-1B fine also sparked fears that he could introduce measures to quash the nearly $300 billion Indian outsourcing industry, which bodes poorly for local tech names. 

China stocks sink as tech sector stalls 

China’s mainland Shanghai Shenzhen CSI 300 fell 1%, while the Shanghai Composite index shed 1.2%. Hong Kong’s Hang Seng index fell 1%.

Gains in tech, amid optimism over China’s domestic AI efforts, had pushed Chinese stock bourses to multi-year highs through August and early-September. But this rally was seen pausing for breath in recent sessions, with major tech names also facing a heavy dose of profit-taking. 

Baidu Inc (HK:9888) was the worst hit by this trade, tumbling 7% after hitting two-year highs last week. Tencent Holdings Ltd (HK:0700) shed 0.5%, while Alibaba (HK:9988) rose slightly after releasing a new open-sourced Qwen AI model. 

Electronics component manufacturer Luxshare Precision Industry Co Ltd (SZ:002475) outperformed its peers on Tuesday, surging 10% to a record high after reports said the company will supply components for an AI device to OpenAI.

The stock was also boosted by some optimism over strong demand for key customer Apple’s recently launched iPhone 17 line.