(Sharecast News) - Asia-Pacific equity markets mostly advanced on Wednesday, breaking ranks with losses on Wall Street after a sell-off in US technology stocks, while gold extended gains for a second day and pushed through the $5,000 mark.
Regional sentiment was supported by strength across China, South Korea and Australia, even as Japanese equities lagged on heavy technology selling.
As Patrick Munnelly, market strategy partner at TickMill, noted, "software stocks across Asia, from India to Japan, took a hit as concerns mounted over how advancements in artificial intelligence could disrupt traditional business models, echoing the declines seen in their US counterparts," even as gains in more traditional sectors helped steady broader benchmarks.
Tokyo benchmark in the red, other markets rise
In Japan, the Nikkei 225 slipped 0.78% to 54,293.36, dragged lower by sharp declines in major technology and consumer names.
NEC Corporation fell 11.79%, Recruit Holdings dropped 10.1% and Nintendo Co slid 10.98%.
Nintendo shares fell more than 10% despite the company maintaining its full-year sales forecast for the Switch 2 console, as investors weighed potential headwinds including the risk of an unprecedented surge in memory prices, a key input for its hardware.
Munnelly highlighted that weakness across the region's tech complex was widespread, pointing out that "Australia's cloud-based accounting software company Xero suffered a sharp decline of more than 15%, and Japan's Nomura Research Institute slid by 8%."
The broader Topix index outperformed, edging up 0.27% to 3,655.58, reflecting relative resilience in non-technology sectors.
Chinese equities were firmer, with the Shanghai Composite rising 0.85% to 4,102.20 and the Shenzhen Component adding 0.21% to 14,156.27.
Gains were led by Geo-Jade Petroleum, Metro Investment Development and Anhui Hengyuan Coal Industry and Electricity Power, each up just over 10%.
Economic data showed improving momentum in services, with the RatingDog China general services PMI climbing to 52.3 in January from December's six-month low of 52.0, above expectations of 51.8 and marking the strongest expansion since last October.
The survey pointed to stronger new orders and a renewed increase in foreign sales, prompting firms to add staff for the first time since July, although business sentiment softened amid concerns over the global growth outlook.
Munnelly said the broader picture across Asia showed that "the slump in Asian software stocks was somewhat balanced by gains in traditional sectors like finance and manufacturing, which are anticipated to benefit as investors shift their focus away from technology."
Hong Kong's Hang Seng Index was little changed, up 0.05% at 26,847.32, with gains in Xinyi Glass Holdings, up 5.88%, China Shenhua Energy, which rose 5.67%, and China Resources Land, higher by 5.41%.
Across the region, Munnelly noted that despite sector volatility, "the MSCI Asia Pacific Index remained relatively steady."
South Korean markets outperformed, with the Kospi 100 climbing 1.3% to 6,062.20.
Hanwha Solutions surged 29.95%, while DB Insurance gained 8.29% and KakaoBank advanced 8.23%, underscoring investor appetite for financial and industrial names amid ongoing rotation away from high-growth technology stocks.
Sydney higher, Wellington manages gains after employment data
Australian equities also rose, with the S&P/ASX 200 up 0.8% at 8,927.80, supported by strength in mining stocks.
Yancoal Australia jumped 9%, South32 gained 6.21% and Northern Star Resources rose 6.17%.
In New Zealand, the S&P/NZX 50 added 0.34% to 13,467.29, led by Heartland Group Holdings, up 3.23%, Contact Energy, which gained 2.79%, and Mercury NZ, up 2.22%.
New Zealand labour market data showed early signs of stabilisation despite a higher headline unemployment rate.
The jobless rate rose to a decade high of 5.4% in the December quarter from 5.3%, slightly above expectations and the central bank's forecast.
Employment increased 0.5% quarter on quarter, beating forecasts and outpacing population growth, while participation rose to 70.5%.
Hours worked increased again, pointing to improving activity, although wage pressures remained subdued, with private-sector labour costs up 0.5% on the quarter and annual growth slowing to 2%.
The data broadly aligned with central bank forecasts and left the policy outlook unchanged, with expectations for a first OCR hike still centred on late 2026.
Dollar strengthens, oil prices firm slightly
In currency markets, the dollar strengthened across the region, last trading up 0.69% on the yen at JPY 156.82, as it gained 0.12% against the Aussie to AUD 1.4259, and rose 0.5% on the Kiwi to change hands at NZD 1.6621.
Munnelly added that "the Japanese yen weakened as markets prepared for the upcoming national election," while safe-haven demand lifted bullion, with "gold prices surged above $5,000 per ounce, driven by dip buying."
Oil prices were slightly firmer, with Brent crude futures last up 0.1% on ICE at $67.40 a barrel and the NYMEX quote for West Texas Intermediate gaining 0.21% to $63.34, as "oil prices climbed after the US Navy intercepted and shot down an Iranian drone near an aircraft carrier in the Arabian Sea," extending gains for a second session amid heightened geopolitical tensions.
Reporting by Josh White for Sharecast.com.
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