Asia report: Nikkei leads declines on mixed day for region
By Josh White
Date: Monday 01 Dec 2025
(Sharecast News) - Asia-Pacific equities began December on a mixed note as investors weighed weak Chinese factory data against mounting expectations of a US interest rate cut this month.
Traders are pricing in an 87.4% chance of a quarter-point reduction at the Federal Reserve's 10 December meeting, according to the CME FedWatch Tool, helping support sentiment despite uneven regional performance.
Patrick Munnelly at TickMill noted that "expectations for a Federal Reserve interest rate cut in December remain robust," even as broader risk appetite faded in some asset classes.
Tokyo leads declines on mixed day for region
Japan led declines - the Nikkei 225 fell 1.89% to 49,303.28, dragged lower by steep losses in Tokyo Electric Power Company, Fujikura and Mitsui Kinzoku, which dropped 9.71%, 8.94% and 6.79% respectively.
The broader Topix shed 1.19% to 3,338.33.
The sell-off coincided with a firmer yen, and Munnelly said that "Japanese stocks experienced the most significant losses in Asia, attributed to a surge in the yen following Bank of Japan Governor Ueda's indication of a possible rate hike this month."
He added that "prior to his remarks, the two-year bond yield hit its highest mark since 2008," underscoring the shift in rate expectations.
Fresh Ministry of Finance data showed corporate spending on factories and equipment rose 2.9% year on year in July-September, down from a 7.6% increase in the previous quarter and 1.4% lower on a seasonally adjusted basis.
The softer capital expenditure figures may weigh on revised GDP data due on 8 December after preliminary figures showed the economy contracted at an annualised 1.8% in the third quarter amid falling exports.
Still, recurring profit surged 19.7% and corporate sales edged up 0.5%, underscoring resilience in the electrical machinery sector even as automobile manufacturers struggled against US tariffs.
Munnelly highlighted governor Ueda's stance, saying the BoJ would "evaluate the advantages and disadvantages of adjusting the policy interest rate and make appropriate decisions" after assessing the economy and inflation trends.
China's markets advanced despite signs of stalling factory momentum.
The Shanghai Composite gained 0.65% to 3,914.01, buoyed by strong moves in Jiangsu High Hope International Group, Guangdong Meiyan Jixiang Hydropower and Sichuan Hebang Biotechnology, each up around 10%.
The Shenzhen Component rose 1.25% to 13,146.72.
The RatingDog China general manufacturing PMI, compiled by S&P Global, slipped to 49.9 in November, missing forecasts of 50.5 and falling below the expansion threshold.
Munnelly said that "a boost in metal stocks allowed Chinese markets to commence December positively, despite Sunday's report indicating that factory activity rose but remained in negative territory during November, marking a record extended period of decline amid the ongoing economic recession in the country."
The retreat followed official data showing factory activity remained in contraction at 49.2, marking an eighth straight month of weakness as services also cooled after earlier holiday-driven gains.
Hong Kong equities edged higher, with the Hang Seng Index rising 0.67% to 26,033.26.
Sunny Optical Technology jumped 6.22% after reports indicated Apple's first foldable smartphone, the so-called iPhone Fold, had entered engineering verification and pre-mass production, with a launch expected before the end of 2026.
Zijin Mining Group added 5.28% after founder Chen Jinghe announced his departure as chairman for age and family reasons, becoming honorary chairman and senior consultant.
JD Health International also gained 3.93%.
Seoul lags, Australasian markets in the red
Elsewhere, South Korea lagged.
The Kospi slipped 0.16% to 3,920.37 as Chinyang Poly Urethane, Koas and Dongyang Express tumbled 20.58%, 18.39% and 11.41% respectively.
A PMI reading of 49.4 in November signalled a second month of contraction amid weak domestic demand and lingering tariff effects.
However, export momentum continued, with shipments rising 8.4% year on year and semiconductor exports climbing nearly 39% on sustained AI and data-centre demand.
A trade surplus of $9.7bn underscored the strength of chip and auto sales.
The Bank of Korea, which kept rates at 2.5% last week, upgraded growth forecasts through 2026 but warned of inflation pressures as input costs accelerated to a nine-month high, even as firms cut output prices to support demand.
Business confidence weakened amid concerns over the pace of the recovery, price volatility and competition.
Down under, Australian stocks fell as technical issues disrupted local markets.
The S&P/ASX 200 declined 0.57% to 8,565.20 after a glitch prevented price-sensitive announcements from being released for hours, forcing around 50 companies into trading halts.
AUB Group slumped 17.77% after EQT and CVC abandoned a joint AUD 45-per-share takeover proposal.
Metcash dropped 9.19% following mixed half-year results marked by stagnant profit growth, while Temple & Webster Group lost 7.28%.
Government data showed gross operating profits were flat in the quarter, missing expectations of a 1.7% rise.
Across the Tasman Sea, New Zealand's S&P/NZX 50 slipped 0.3% to 13,448.49 as Eroad fell 5.23%, Sanford declined 4.27% and A2 Milk Company dropped 3.09%.
Dollar mixed as oil prices rise
In currencies, the yen strengthened with the dollar last down 0.61% to trade at JPY 155.22, while it edged up 0.03% against the Aussie to AUD 1.5270 and rose 0.06% on the Kiwi to change hands at NZD 1.7447.
Oil prices gained, with Brent crude futures last up 1.07% on ICE at $63.05 per barrel, and the NYMEX quote for West Texas Intermediate advancing 1.09% to $59.19.
Reporting by Josh White for Sharecast.com.
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