Asian stock markets retreated on Wednesday as investors turned cautious ahead of a closely watched U.S. Federal Reserve interest rate decision. Markets across the region tracked mild overnight losses on Wall Street, where major U.S. indexes dipped on uncertainty over the Fed’s forward guidance. While the central bank is widely expected to cut rates by 25 basis points, analysts warned that policymakers may still signal a more hawkish stance, dampening risk appetite. S&P 500 futures also edged lower in early Asian trading.
Chinese equities led regional declines as persistent deflationary pressures continued to weigh on sentiment. The Shanghai Shenzhen CSI 300 slipped 0.9%, the Shanghai Composite dropped 0.7%, and Hong Kong’s Hang Seng Index fell 0.4%. Fresh government data showed that although China’s consumer price index rose year-on-year in November, it unexpectedly contracted from the previous month. Producer prices fell for a 38th straight month, underscoring weak domestic demand and raising fresh concerns about China’s growth outlook heading into 2026.
Beijing’s Politburo pledged additional fiscal stimulus in the coming months, but the announcement offered little immediate support. Chinese chipmakers also faced renewed pressure after U.S. President Donald Trump stated he would allow NVIDIA to sell more advanced AI chips in China, intensifying uncertainty across the sector.
Japan’s Nikkei 225 slipped 0.3%, while the TOPIX eased 0.2% as stubborn producer price inflation fueled speculation that the Bank of Japan may soon raise interest rates. Analysts expect rate discussions to intensify ahead of the BOJ’s late-December meeting. Ongoing geopolitical tensions between Japan and China over Taiwan further dampened market sentiment.
Elsewhere in the region, Australia’s ASX 200 extended losses following a hawkish signal from the Reserve Bank. Singapore’s Straits Times Index edged down 0.2%, South Korea’s KOSPI traded flat, and India’s Nifty 50 futures slipped after airline giant IndiGo suffered nearly 8% in declines amid an operational crisis.


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