Major stock markets across Asia closed sharply lower on Tuesday, December 16, 2025, mirroring a cautious retreat on Wall Street. Investors are positioning themselves cautiously ahead of crucial US employment and inflation figures, while growing anxiety over a potential bubble in the technology sector further dampened sentiment.
Investors Await Key US Economic Signals
The trading day was dominated by anticipation for the release of US November jobs data, along with a delayed reading for October. These figures, followed by Consumer Price Index (CPI) numbers on Thursday, are seen as critical for gauging the Federal Reserve's next move on interest rates.
Market analysts are scrutinising every data point for clues on whether the Fed will continue its rate-cutting cycle in January. Recent comments from Fed officials reveal a divided policy board. Initial rate reductions were driven by concerns about a softening labour market, but the focus is now shifting back to persistently high inflation.
Governor Stephen Miran, an appointee of former President Donald Trump, stated that interest rates remain too high. In contrast, New York Fed President John Williams believes rates are approximately at the right level, and Boston Fed President Susan Collins described the upcoming decision as a "close call."
Matt Weller, Head of Market Research at City Index, noted, "After essentially missing the October jobs report... the Fed will closely scrutinise the November figures when setting out the path of monetary policy through early 2026." He added that traders currently see only a 25% chance of another rate cut in January, limiting potential market reaction unless the data shows significant labour market deterioration.
Tech Sector Worries Compound Market Pressure
Beyond macroeconomic data, specific fears about the technology industry are weighing heavily on markets. This year's significant rally, largely driven by tech stocks, is ending on a tepid note. Investors are questioning the vast sums poured into artificial intelligence (AI) and whether these investments will yield timely returns.
These concerns were amplified last week by disappointing earnings reports from tech giants Oracle and Broadcom. Broadcom's failure to provide concrete forward guidance and reports of potential delays in Oracle's data centre construction have sparked fresh jitters.
Michael Brown of Pepperstone observed, "Jitters over the AI theme have resurfaced in recent sessions... Concern also lingers over the increase in debt-financed capex, especially from the likes of Oracle." He suggested these worries are likely to persist into the new year.
Market Performance and Currency Movements
The bearish sentiment led to broad-based declines across Asian equity markets:
- Tokyo's Nikkei 225 fell 1.3% to 49,523.56.
- Hong Kong's Hang Seng Index dropped 1.7% to 25,205.57.
- Shanghai Composite was down 1.1% at 3,825.00.
- Markets in Seoul, Taipei, Sydney, Singapore, and Jakarta also closed in negative territory.
The risk-off mood extended to cryptocurrencies, with Bitcoin falling to around $85,171. Conversely, gold—a traditional safe-haven asset—rose back above $4,300 per ounce, approaching a record high.
In currency markets, the Japanese Yen held its gains against the US Dollar, trading at 154.90 yen ahead of a widely anticipated interest rate hike by the Bank of Japan on Friday.
This combination of pending US economic data, Federal Reserve policy uncertainty, and sector-specific anxieties in technology has created a perfect storm of caution, leading to a significant pullback in Asian equities as the year draws to a close.
