Asia stocks retreat: HK buoyed by tech, S.Korea extends post-election rally

Investing.com-- Most Asian stocks fell on Thursday amid uncertainty over U.S. trade policy and weak economic data, although Hong Kong and South Korea outperformed on technology gains and optimism over new leadership in Seoul.

Regional markets took middling cues from Wall Street, which was dented by soft labor data and persistent fears of higher trade tariffs under President Donald Trump. 

Trump is set to hold a call with Chinese President Xi Jinping later this week, although more details on the call remain unclear. 

S&P 500 Futures fell 0.1% in Asian trade. 

Japan’s Nikkei 225 and TOPIX indexes fell 0.4% and 0.8%, respectively, after wage data read softer-than-expected for April. The reading raised concerns over just how much private spending will recover in the coming months, raising doubts over sustained Japanese economic growth. 

Australia’s ASX 200 fell 0.1%, pressured by softer than expected trade data for April, which showed a sharp decline in commodity exports.

Singapore’s Straits Times index was flat, while Gift Nifty 50 Futures for India’s Nifty 50 index pointed to a flat open. Focus in India is squarely on a potential 25 basis point rate cut by the Reserve Bank on Friday. 

Hong Kong rises on tech gains; China flat 

Hong Kong’s Hang Seng index was among the better performers on Thursday, rising as much as 1% on gains in regional tech shares.

Index heavyweights such as Alibaba (HK:9988), Meituan (HK:3690), and BYD Electronic International Co Ltd (HK:0285) rose between 2% to 5%, tracking broader gains in U.S. tech shares. Chipmaker Semiconductor Manufacturing International Corp (HK:0981) rose 2.5%. 

Global tech stocks were buoyed by a drop in U.S. Treasury yields, as soft labor data from the world’s biggest economy sparked increased bets on more interest rate cuts by the Federal Reserve. 

Optimism over stronger artificial intelligence trends, particularly for chipmakers, also boosted tech shares, with Taiwan’s TSMC (TW:2330) adding 0.2%. South Korean chipmakers SK Hynix Inc (KS:000660) and Samsung Electronics Co Ltd (KS:005930) rallied 5.4% and 3.3%, respectively. 

Mainland Chinese shares lagged, with the Shanghai Shenzhen CSI 300 and Shanghai Composite indexes losing about 0.1% each. Caixin purchasing managers index data showed China’s services sector grew slightly more than expected in May, but this was offset by a deep contraction in manufacturing activity. 

Investors broadly expect Beijing to unlock more stimulus in the coming months, especially as the country grapples with a U.S. trade conflict.

Xi and Trump’s call this week could help revitalize trade talks between the two countries, which Washington admitted had stalled in recent weeks. 

South Korea’s KOSPI extends post-election surge 

South Korea’s KOSPI outpaced its Asian peers for a second consecutive session, rising as much as 2% to a near 11-month high. Gains in tech stocks also boosted the index.

Sentiment towards South Korean markets improved greatly after Liberal party candidate Lee Jae-myung was elected as the country’s new President.

Investors hoped that the election marked an end to over six months of political uncertainty in the country, especially after ousted President Yoon Suk Yeol’s failed attempt to establish military law in late-2024. 

A revised reading on first-quarter gross domestic product data also showed the South Korean economy did not shrink 0.1% as previously estimated, with growth instead having remained flat.