Asian equity markets opened the week lower as investors reacted to Wall Street’s worst session in three weeks and rising expectations of a Bank of Japan rate hike.
Bitcoin (CRYPTO:BTC) prices also fell sharply in early trading as higher Japanese interest rates threatened to reduce appetite for risk assets.
Japan’s Nikkei 225 declined 1.3% to 50,168.11 despite a modest improvement in business sentiment reported by the Bank of Japan.
The central bank’s quarterly tankan survey showed optimism among large manufacturers rose to its highest level in four years.
However, forecasts for the next quarter were less upbeat, reflecting lingering uncertainty across the economy.
Japan’s economy contracted at an annualised pace of 2.3% in the July–September period, its first decline in six quarters.
Markets remain focused on expectations that the Bank of Japan will raise its key policy rate by 0.25 percentage points to 0.75% later this week.
Higher domestic rates are expected to draw capital back into Japan, reducing demand for alternatives such as cryptocurrencies.
Bitcoin slipped below $88,000 before recovering to just above $90,000 later in the session.
Chinese shares also weakened after fresh data showed continued softness in domestic demand.
Fixed-asset investment in China fell 2.6% year-on-year in November, extending a broader slowdown.
Retail sales and factory output posted moderate gains, but failed to reassure investors.
A recent high-level Communist Party meeting produced no major policy shifts to revive growth.
“Policy support should help drive a partial recovery in the coming months, but this probably won’t prevent China’s growth from remaining weak across 2026 as a whole,” Zichun Huang said.
Hong Kong’s Hang Seng Index dropped 1.4%, while the Shanghai Composite slipped 0.6%.
South Korea’s Kospi declined 1.8% and Taiwan’s benchmark index fell 1.2%.
Australia’s S&P/ASX 200 edged 0.7% lower amid broad regional weakness.
US stock futures pointed slightly higher after Friday’s sell-off led by technology shares.
Investors remain cautious as artificial intelligence stocks continue to face valuation pressure.
At the time reporting, Bitcoin price was $89,698.54.