Asian Markets Feel the Pressure from Wall Street and Japan's Recession
Shares across Asia traded predominantly lower on Monday, 17th November 2025, reflecting a cautious mood following a lacklustre finish on Wall Street last week. This downward trend coincided with concerning economic data from Japan and heightened geopolitical friction in the region.
Investor sentiment was dampened by news that the Japanese economy contracted at an annualised pace of 1.8% in the July-September quarter. This development pushed the Nikkei 225 index in Tokyo down by 0.3% to 50,226.67. The US dollar also strengthened against the Japanese yen, rising to 154.65 yen.
Geopolitical Tensions and Regional Market Performance
Market dynamics were further complicated by diplomatic strains between China and Japan. The friction escalated after Japanese Prime Minister Sanae Takaichi suggested that a Chinese move against Taiwan could prompt a Japanese military response. China, which claims Taiwan as its own territory, strongly objects to such external involvement and has since warned its citizens against travelling to or studying in Japan.
Stephen Innes of SPI Asset Management commented on the situation, stating, “China’s escalation against Japan over Prime Minister Takaichi’s Taiwan remarks has moved from a diplomatic irritant to a consequential macro input, with markets now forced to reprice Asia’s near-term risk curve.”
Reflecting this cautious environment, Chinese markets also slipped. Hong Kong's Hang Seng index shed 0.8% to 26,359.22, and the Shanghai Composite declined 0.4% to 3,973.31. Australia's S&P/ASX 200 edged down less than 0.1% to 8,628.60.
Bright Spots: Tech Rally and US Futures Rebound
Despite the broader downturn, there were pockets of positive momentum. South Korea's Kospi surged 1.7% to 4,078.39, driven by robust buying of technology shares. This rally was fuelled by plans for cooperation with industry leader Nvidia to develop artificial intelligence, which saw shares of SK Hynix jump 6.8% and Samsung Electronics rise 3.3%.
Other markets also saw gains, with Taiwan's Taiex adding 0.4% and India's Sensex climbing 0.3%. Looking ahead, US futures pointed to a potential rebound, with the S&P 500 future up 0.5% and the Dow Jones Industrial Average future edging 0.1% higher.
This follows a volatile session on Friday where the S&P 500 ended down less than 0.1%. All eyes are now on Nvidia's profit report due on Wednesday, which could significantly influence market direction. In other early Monday trading, Bitcoin rose 1.1% to approximately $95,400, while US benchmark crude oil prices fell.
