Anna 
Most Asian stocks experienced a retreat on Tuesday as caution prevailed in the markets ahead of several key economic readings scheduled for the week. The Nikkei 225 index in Japan, which had reached record highs earlier in the day, traded marginally lower after slightly stronger-than-expected inflation data for January. The Consumer Price Index (CPI) reading, while slightly below the prior month, raised concerns that the Bank of Japan might consider ending its ultra-dovish policies, including yield curve control and negative interest rates, as early as April.
The Nikkei’s retreat from record highs reflected investor unease about potential shifts in the central bank’s policies, which had been a key support for Japanese markets amid global economic challenges. The BOJ’s accommodative stance, combined with a weakened yen, had attracted foreign investors to local stocks. However, the recent spike in valuations and concerns about the economic outlook, including an unexpected recession, made Japanese stocks susceptible to negative news.
Despite the Nikkei’s pullback, the broader TOPIX index rose 0.7% and achieved a record high. In other parts of Asia, broader market sentiment was influenced by caution ahead of crucial economic data releases. Australia’s ASX 200 index fell 0.3%, with a focus on the upcoming monthly inflation reading for January. South Korea’s KOSPI declined 0.5%, extending losses for a second consecutive session as investors engaged in profit-taking, particularly in technology stocks.
Futures for India’s Nifty 50 index indicated a mildly weak open, aligning with the broader Asian trend. Profit-taking in the Indian market extended after reaching record highs the previous week. Overall sentiment in the region was also affected by anticipation of the U.S. Personal Consumption Expenditures (PCE) price index data later in the week. The PCE index is the Federal Reserve’s preferred inflation gauge, and its impact on the outlook for U.S. interest rates has been a significant factor for Asian markets.
As Asian markets braced for key economic indicators and responded to global economic developments, caution remained prevalent, leading to a mixed and slightly bearish sentiment across the region.
