Hang Seng stuck below 24,800 resistance: Live levels

Asian stock markets showed a disjointed performance last week, as rising concerns over rising interest rates and geopolitical tensions in the Middle East weighed on investors. The Japanese Nikkei 225 index remained largely unchanged at 66,333 points, while the broader Topix index rose slightly to 4,135. China's Shanghai Stock Exchange, however, saw a decline of 1.9% to 3,815 points, with the CSI-300 index falling 2.2% to 4,340 points.

The focus on the Bank of Japan's monetary policy led to speculation that interest rate hikes may be more aggressive than anticipated. The yen weakened amid fears of rising inflation, driven by higher energy import prices and the Middle East conflict. This, in turn, put upward pressure on bond yields, affecting tech stocks sensitive to interest rates, which are currently investing billions in AI development.

Weak Chinese economic data contributed to investor sentiment, as industrial profits continued to slow in August. Computer and electronics manufacturers, benefiting from the AI boom, were among the clear winners, with profits soaring 110% in the first eight months of the year. The beverage industry, however, saw a 34.7% decline in profits.

A central bank advisor warned that AI could exacerbate the imbalance between strong supply and restrained domestic demand. Geopolitical risks also loomed due to the shift in focus towards export-oriented economies. Bruce Kasman, chief economist at JPMorgan, noted that the worldwide expansion appeared to be entering a phase similar to what was rarely seen in the past two decades.

In Asian currency markets, the dollar gained 0.3% to 157.67 yen and rose slightly to 6.72 yuan, while the Swiss franc slipped to 0.83 francs. The euro remained nearly unchanged at 1.13 dollars and rose slightly to 0.94 francs. The US dollar remained buoyed by strong economic data and expectations of further rate hikes by the Federal Reserve in October.

Despite hawkish remarks from the Bank of Japan, the yen continued to face pressure. Brent crude oil prices fell by 1.9% to 106.25 dollars per barrel, while US oil (WTI) fell by 1.1% to 93.39 dollars. Geopolitical uncertainty in the Middle East continued to weigh on oil prices. US President Donald Trump rejected an Iranian peace proposal to open the Hormuz Strait, and Huthi rebels supported by Iran continued their attacks on Saudi Arabia, raising concerns about potential supply disruptions in the region.