Asian equities opened Tuesday on a cautious note, extending Monday’s soft tone as traders positioned ahead of key U.S. inflation readings that could shape global monetary policy sentiment. Risk appetite waned across major indices, with technology-heavy markets such as Japan and South Korea leading the declines, while the stronger Australian dollar reflected some resilience in commodity-linked plays.

Broad Selloff Across Asian Equities

Equity markets across the region were largely in the red by mid-morning trading. Hong Kong’s Hang Seng Index fell 1.52% to 25,889.48, weighed by renewed pressure on Chinese property and technology names as investors continued to assess Beijing’s economic support measures. The Shanghai Composite slipped 0.19% to 3,889.50, marking a mild retreat following last week’s modest recovery.

Japan’s Nikkei 225 dropped 1.01% to 48,088.80 as semiconductor and export-oriented shares came under pressure from a strengthening dollar and rising global yields. The broader KOSPI in South Korea slid 0.72% to 3,584.55, extending its recent pullback amid concerns over soft chip demand and cautious earnings guidance from key manufacturers.

India’s SENSEX eased 0.21% to 82,327.05 after a volatile session, reflecting profit-taking in banking and energy stocks following strong gains earlier in the week. Overall, the region’s subdued tone pointed to a fragile sentiment as global investors remain sensitive to macroeconomic data and central bank rhetoric.

Currency Markets Highlight Diverging Trends

In currency trading, the Japanese yen weakened further to 65.69 on the index, losing 0.68%, as traders bet that the Bank of Japan would maintain its ultra-loose policy despite persistent inflationary pressures. The weaker yen provided temporary support for exporters but underscored the widening gap between Japan’s monetary stance and those of Western central banks.

Conversely, the Australian dollar index strengthened 0.63% to 65.18, benefiting from optimism surrounding commodity demand and China’s tentative economic stabilization. The currency’s advance offered a bright spot for the region, reflecting relative confidence in Australia’s resource-driven outlook.

Investors Await Global Inflation and Retail Data

With major U.S. inflation and retail sales data due later this week, markets in Asia are largely in wait-and-see mode. The results will likely influence expectations for the Federal Reserve’s next policy steps, particularly after recent statements from policymakers signaled a possible pause in rate adjustments.

Asian investors are balancing optimism over slowing global inflation with concerns about uneven growth across major economies. A softer-than-expected U.S. CPI reading could boost regional equities by alleviating pressure on emerging market currencies and supporting capital inflows. However, a surprise to the upside may reignite fears of prolonged high rates, dampening risk sentiment and triggering renewed volatility.

Looking ahead, traders will monitor China’s upcoming GDP and industrial production data for further clues on regional growth momentum. The interplay between global monetary policy, commodity trends, and Asia’s export outlook will remain key drivers in the coming sessions. While short-term caution dominates the market, any signs of stabilization in inflation and trade dynamics could open the door to a broader recovery across Asian equities.