Asia report: Markets mixed in thin holiday trading

(Sharecast News) - Asian shares consolidated recent hefty gains on Monday as Lunar New Year holidays led to thin trading across the region, while weak economic data from Japan weighed on sentiment in Tokyo.

Patrick Munnelly, market strategy partner at TickMill, noted, "Across Asia, stock markets remained flat, with the MSCI Asia Pacific Index hovering near record levels after climbing about 11% so far this year," reflecting a pause after a strong start to 2026.

Markets in China, South Korea and Taiwan were closed, leaving currency and bond markets largely becalmed, though precious metals came under renewed pressure.

"Bonds saw gains, and stocks remained steady after mild US inflation figures reinforced expectations that the Federal Reserve will reduce interest rates this year, easing market jitters over potential AI-driven disruptions," Munnelly said.

"Meanwhile, gold took a dip."

He added that "government bonds in Australia and New Zealand experienced an uptick, while US Treasury futures held firm," and that "traders are fully pricing in a Fed rate cut for July, with a significant chance of action as early as June," after US inflation data pushed Treasury yields lower.

"Silver, however, slid by as much as 3.6%," he said.

Markets mixed on quiet Monday

In Japan, the Nikkei 225 fell 0.24% to 56,806.41, while the broader Topix declined 0.82% to 3,787.38.

Olympus dropped 12.87%, Resona Holdings lost 8.01% and Nikon fell 6.75%.

Data showed Japan's economy expanded at an annualised pace of just 0.2% in the December quarter, well below forecasts for 1.6%, as government spending dragged on activity.

The weak reading underscored challenges facing prime minister Sanae Takaichi and was likely to bolster calls for more aggressive fiscal stimulus.

Munnelly observed that "the Japanese yen weakened by 0.3% against the dollar, while Japanese bond futures edged higher".

"Slower-than-expected economic growth tempered expectations of rate hikes from the Bank of Japan."

Mainland Chinese markets were closed for the Lunar New Year holiday.

In Hong Kong, however, the Hang Seng Index rose 0.52% to 26,705.94, with China Hongqiao Group up 3.92% and CNOOC gaining 3.71%.

South Korean markets were shut for the Seotdal Geumeum holiday.

In Australia, the S&P/ASX 200 added 0.22% to 8,937.10, led by a 19.51% surge in Austal, while Wisetech Global climbed 12.88% and Seek advanced 7.95%.

New Zealand's S&P/NZX 50 fell 0.61% to 13,117.91, with Vista Group International down 8.89%, Ryman Healthcare off 5.36% and KMD Brands 3.92% lower.

Dollar mixed as oil prices firm slightly

In currency markets, the dollar strengthened 0.54% against the yen to JPY 153.53, while it edged 0.13% lower on the Aussie to AUD 1.4119 and slipped 0.01% against the Kiwi to change hands at NZD 1.6557.

"The dollar held its ground, while Bitcoin traded near $68,300 following a weekend rebound," Munnelly said.

Oil prices were firmer, with Brent crude futures last up up 0.22% on ICE at $67.90 a barrel and the NYMEX quote for West Texas Intermediate rising 0.16% to $62.99, with Munnelly noting that "oil prices stayed relatively stable as traders kept an eye on geopolitical developments ahead of Tuesday's talks between the US and Iran."

Reporting by Josh White for Sharecast.com.