Investing.com – Most Asian shares fell slightly on Tuesday as a stimulus-fueled rally in Chinese markets fizzled out, while concerns over higher and longer-term interest rates also dampened sentiment.
Hong Kong’s index was the worst performer of the day as electric vehicle and technology stocks fell.
Regional technology stocks also stalled as investors grew uncertain ahead of expected earnings from artificial intelligence darling NVIDIA (NASDAQ:) on Wednesday.
Wall Street indexes gave middling signals to Asian markets after a mixed close on Monday. While technology developments led to record growth, most other sectors lagged amid continued uncertainty over interest rates. US stock index futures fell slightly in Asian trading.
Rally in China stalled, awaiting new incentives
China and indexes fell 0.3% and 0.4% respectively, retreating from their highest levels seen in 2024.
Local markets saw some profit taking following a stellar recovery over the past two months.
But markets were also waiting to see how Beijing would implement its latest slate of stimulus measures and their potential impact on the economy. While optimism about additional stimulus was a key driver of China’s recent stock rally, markets were now waiting to see how much the measures would support the economy.
Analysts say the rollout of Chinese stimulus packages will be key to economic recovery, especially those aimed at the beleaguered property market.
Hong Kong shares fall amid EV and tech losses
Hong Kong’s index was the worst performer in Asia on Tuesday, down 2% from a nine-month high.
The huge loss was mainly caused by a nearly 20 percent drop in shares Lee Auto (NASDAQ:) Inc (HK:) after the electric vehicle maker posted disappointing first-quarter earnings. Losses in Lee spilled over into other electric vehicle stocks, with BYD (SZ:) Co Ltd (HK:) and Geely Automobile Holdings Ltd (HK:) each down more than 3%.
Shares of Hong Kong’s biggest tech companies also fell for idiosyncratic reasons. Tencent Holdings Ltd (HK:) shares fell 3% after the highly anticipated mobile game Dungeon & Fighter was taken offline just an hour after launch.
Alibaba Shares of Group Holding Ltd (HK:) (NYSE:) fell 1% after its cloud division further cut prices, especially on AI bot Tongyi Qianwen.
Baidu Inc (HK:) (NASDAQ:) fell 3%, tracking losses among its peers.
Broader Asian markets moved in a flat-to-low range as investors awaited further signals on US interest rates this week. In Japan, the index rose 0.2%, while the broader index rose 0.1%.
Australian shares fell 0.3% after minutes from the Reserve Bank of Australia’s May meeting showed the bank was indeed considering raising interest rates to combat persistent inflation.
South Korean shares fell 0.5%, while India index futures opened moderately positive.