Asian equity markets opened the week on a cautious note Monday, October 20, with investors weighing weak sentiment from China and Japan against resilience in India and South Korea. Thin trading across the region — partly due to the Diwali holidays in Singapore and Sri Lanka — added to volatility as global investors continued to assess the outlook for interest rates, energy prices, and corporate earnings heading into the final quarter of 2025.

Chinese and Hong Kong Markets Lead Regional Declines

China’s mainland and Hong Kong markets saw the sharpest losses in Monday’s session. The Shanghai Composite Index slid 1.95% to 3,839.76, while the Hang Seng Index tumbled 2.48% to 25,247.10. Investor sentiment weakened following renewed signs of sluggish domestic demand and a soft property sector, with technology and financial shares leading declines.

Traders cited growing concerns over potential new U.S. trade restrictions on Chinese technology exports and weaker-than-expected lending data from September. The pullback reflects ongoing investor hesitation about Beijing’s ability to stabilize growth despite recent policy easing measures. Hong Kong’s tech-heavy benchmark also mirrored declines in global semiconductor and EV-related names, deepening the regional sell-off.

Japan’s Nikkei Retreats; Korea and India Stay Resilient

Japan’s Nikkei 225 dropped 1.44% to 47,582.15, extending last week’s losses as the yen weakened slightly to 66.39 against the dollar. Profit-taking hit major exporters, while investors braced for corporate earnings due later this week. Analysts noted that concerns about slowing U.S. demand and rising energy costs are pressuring Japan’s industrial sector.

In contrast, South Korea’s KOSPI Composite Index edged up 0.01% to 3,748.89, supported by gains in chipmakers and telecoms. Meanwhile, India’s benchmark S&P BSE Sensex rose 0.58% to 83,952.19, marking one of the day’s best performances in Asia. Strong banking and IT stocks lifted the index as domestic funds continued to buy ahead of the corporate earnings season. The Indian rupee also held steady, reflecting investor confidence in the country’s macro stability.

Australia Lags Behind as Commodity Prices Ease

Australia’s S&P/ASX 200 Index slipped 0.81% to 8,995.30, weighed by losses in mining and energy stocks. The decline came as global commodity prices softened and the Australian dollar traded modestly higher at 64.93, up 0.12%. Traders noted that the rise in the local currency may have dampened exporter sentiment, while ongoing uncertainty over China’s industrial demand kept resource-linked equities under pressure.

Market participants remain focused on whether the Reserve Bank of Australia will signal any change in monetary policy stance in its upcoming November meeting. Inflation data due later this week could influence the central bank’s tone, particularly as global central banks weigh the balance between growth and inflation risks.

Low Volume and Regional Observances Temper Activity

Trading volumes across Asia were lighter than usual as several major markets marked the Diwali festival. The Singapore Exchange (SGX) and the Colombo Stock Exchange in Sri Lanka were closed for the holiday, reducing overall liquidity across regional markets. Analysts said this contributed to wider price swings in active markets, particularly in Hong Kong and Shanghai.

Outlook: Investors Eye Earnings and Central Bank Signals

Looking ahead, investors will be watching this week’s U.S. and Japanese corporate earnings for clues on global demand trends. In addition, upcoming economic releases from China — including industrial output and retail sales figures — will offer insight into whether the world’s second-largest economy can regain traction.

Regional attention will also focus on currency stability and bond market reactions as central banks across Asia prepare for potential shifts in monetary policy. With geopolitical risks and slowing trade momentum still in play, markets may remain volatile through the final weeks of October. However, resilient performance in India and selective strength in technology and financials could offer a buffer against broader regional weakness.