Investing.com– Most Asian stocks fell on Friday but Chinese shares extended gains on AI optimism despite U.S. tariffs, while the Reserve Bank of India (NSE:BOI) reduced interest rates for the first time in nearly five years.
U.S. stock index futures were largely unchanged in Asian trading after a mixed close on Wall Street.
RBI cuts rate as expected; Asian central banks see pre-emptive rate cuts
The RBI announced a 25 basis point reduction in the repo rate, bringing it down to 6.25%. This marks the first rate cut in nearly five years, aiming to stimulate the nation's slowing economy.
The move came in the first policy decision under new RBI Governor Sanjay Malhotra.
He highlighted that the combination of subdued economic growth and easing inflation provided the necessary space for this monetary easing.
India’s Nifty 50 was largely unchanged after the decision, ticking down 0.2%, as the move was already priced in.
Recent domestic data showed that India's retail inflation eased to a four-month low of 5.2% in December, but was still above the RBI's medium-term target of 4%.
“Due to uncertainty surrounding tariffs and external demand, Asian central banks are becoming more cautious about the domestic growth outlook, leading to pre-emptive rate cuts.” ING analysts said in a recent note.
Recently, Singapore eased monetary policy for the first time in almost five years, while Indonesia saw unexpected rate cuts.
China stocks rise bucking the regional trend
Despite the imposition of 10% tariffs by the Donald Trump administration on Chinese goods, China's AI sector, led by companies like DeepSeek, has demonstrated resilience, bolstering investor confidence.
China’s Shanghai Composite rose 0.8% on Friday, while the Shanghai Shenzhen CSI 300 index jumped 1%. Hong Kong’s Hang Seng index advanced 0.9%.
Hong Kong-listed Lenovo Group (HK:0992) jumped 7.5%, while Xiaomi (OTC:XIACF) Corp (HK:1810) rose 4.8%.
Elsewhere, most regional stocks were lower amid global uncertainty around Donald Trump’s policies, keeping investors away from riskier assets.
Indonesia’s Jakarta Stock Exchange Composite Index slumped 1.7%, while Thailand’s SET Index declines 1.9%
Japan’s Nikkei 225 lost 0.5% while TOPIX fell 0.4%.
South Korea's KOSPI index was 0.3% weaker, while Singapore's Straits Times Index was largely unchanged.
Australia's S&P/ASX 200 index advanced 0.4%.