(Sharecast News) - Asia-Pacific equities fell broadly on Tuesday, led by sharp losses in South Korea, as a renewed sell-off in US technology stocks spilled into regional markets.
The move followed a continued rotation out of artificial intelligence-linked names on Wall Street, where shares of Oracle fell more than 5%, Broadcom slid over 2% and Microsoft also declined, weighing on risk appetite across Asia.
Patrick Munnelly, market strategy partner at TickMill, noted "stocks declined while the dollar held steady at two-month lows as investors scaled back on risk ahead of key US economic reports that might signal the future of interest rates," adding that the cautious tone reflected "a growing sense of unease in the closing weeks of a year."
Tokyo in the red amid mixed economic data
In Japan, markets retreated sharply, with the Nikkei 225 dropping 1.56% to 49,383.29 and the broader Topix falling 1.78% to 3,370.50.
Losses were concentrated in industrial and technology-linked stocks, with Yaskawa Electric down 7.04%, Fujikura sliding 6.73% and Japan Exchange Group shedding 6.34%.
The pullback came as investors remained wary of global growth and policy signals, with Munnelly pointing out that "Asian stocks dropped by 1.5%, and futures indicated a third consecutive day of losses for the S&P 500 as traders exercised caution before the November US jobs report."
Economic data in Japan offered mixed signals, as the S&P Global flash manufacturing purchasing managers' index (PMI) rose to 49.7 in early December from 48.7 previously, suggesting the sector is edging closer to expansion, supported by improving domestic and overseas demand.
S&P Global said the reading pointed to more stable conditions ahead, following disruption from automobile scandals, higher US trade tariffs and an ongoing diplomatic dispute with China.
The services sector continued to underpin activity, with the flash services PMI at 52.5 in December versus 53.2 in November, while the composite PMI eased to 51.5 from 52.0.
China equities lower amid global tech slump
Chinese equities also closed lower, with the Shanghai Composite down 1.11% at 3,824.81 and the Shenzhen Component falling 1.51% to 12,914.67.
Several stocks hit sharp declines, including TDG Holding, which fell 10.03%, Zoy Home Furnishing down 10.01% and Tongling Jingda off 10%.
In Hong Kong, the Hang Seng Index slid 1.54% to 25,235.41, pressured by declines in Zijin Mining Group, down 4.41%, CK Infrastructure Holdings, which fell 4.39%, and China Life Insurance, down 4.13%.
Munnelly said Chinese stocks had "fallen to significant negative technical levels due to diminishing technological advantages and rising concerns about economic growth," with weak data reinforcing worries about the sustainability of the recovery.
He added that China's latest figures highlighted how "structural issues challenge consumer confidence," pointing in particular to the ongoing housing slump and excess inventory that continued to weigh on household balance sheets.
South Korean stocks led regional losses, with the Kospi plunging 2.24% to 3,999.13.
Korea Zinc tumbled 13.94% after reports it had agreed to sell $1.9bn of new shares to a joint venture backed by the US government and unnamed US-based strategic investors.
The sell-off intensified after major shareholders YoungPoong and MBK Partners sought a court injunction to block the share issue, arguing it would dilute their holdings and strengthen the chairman's control, casting doubt over a planned $7.4bn US zinc smelter project.
Shares of YoungPoong dropped 13.56%, while SeAH Besteel slid 11.85%.
Sydney in the red, Wellington manages region's sole gains
Australian equities reversed earlier gains, with the S&P/ASX 200 closing 0.42% lower at 8,598.90.
IperionX fell 6.39% despite announcing it had entered the prototyping phase of a project with Carver Pump Company to supply titanium components for US Navy vessels, using its low-cost titanium powder and advanced manufacturing processes.
Life360 declined 5.73% and Paladin Energy lost 4.8%.
Economic data showed manufacturing momentum improving in Australia, with the S&P Global manufacturing PMI rising to 52.2 in December from 51.6, while services activity softened, with the services PMI easing to 51.0 from 52.8 and the composite PMI falling to 51.1 from 52.6.
Consumer sentiment weakened sharply, with the Westpac consumer sentiment index dropping 9.0% month-on-month to 94.5, underscoring a fragile outlook as investors looked ahead to policy decisions globally.
New Zealand bucked the regional trend, with the S&P/NZX 50 edging up 0.13% to 13,424.95.
A2 Milk Company rose 2.81%, Eroad gained 2.65% and Meridian Energy advanced 2.56%.
Meridian said national hydro storage reached 153% of the historical average in November, while residential electricity sales volumes jumped 23.2% year-on-year, supported by the warmest November on record.
However, the broader backdrop remained cautious after the government signalled no return to a budget surplus over the next five years, with net debt forecast to peak at 46.9% of GDP as weak growth and higher borrowing delayed fiscal repair.
Dollar mixed as oil prices slide
In currency markets, the dollar eased 0.26% against the yen to JPY 154.82, while rising 0.07% on the Aussie to AUD 1.5067 and slipping 0.02% against the Kiwi to change hands at NZD 1.7293.
Munnelly said currencies were "also in the spotlight, with the yen strengthening against the dollar, trading below 155 in anticipation of the Bank of Japan's expected decision to raise its benchmark rate to the highest in three decades."
Oil prices fell sharply, with Brent crude futures last down 1.55% on ICE at $59.62 per barrel, and the NYMEX quote for West Texas Intermediate lower by 1.71% at $55.85.
Reporting by Josh White for Sharecast.com.
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