Asian Markets Sluggish as Japanese Economic Data Falls Short of Expectations

Asian stock markets tended to move lower in early trading on Monday, 16 February 2026. The decline was triggered by investors scrutinising Japanese economic data that fell far below expectations.

Market sentiment came under pressure after Japan reported extremely thin economic growth for the fourth quarter of 2025. The country’s gross domestic product (GDP) grew just 0.1 per cent on an annualised basis in December 2025 — well below the market projection of 1.6 per cent. Weak government spending was the primary factor restraining economic expansion.

The GDP data underscored the formidable challenges facing Japanese Prime Minister Sanae Takaichi. At the same time, the figures strengthened the case for more aggressive fiscal stimulus to support growth.

According to The Star, Japan’s Nikkei 225 index rose 0.2 per cent, extending a rally of up to 5 per cent from the previous week. Meanwhile, the MSCI Asia-Pacific index excluding Japan edged up 0.1 per cent.

In South Korea, the Kospi index fell 0.28 per cent, or 15.26 points, to 5,507.01. Technology shares surged 8.2 per cent, followed by a nearly 6 per cent rise in Taiwanese technology stocks over the same period.

Nick Ferres, Chief Investment Officer at Vantage Point, warned of risks should large-capitalisation technology companies hold back on capital expenditure. This raised concerns about a potential correction, particularly in memory technology shares that have rallied sharply since the beginning of the year.

“The fear among Asian investors is that if technology giants announce a pause in capital spending, it could trigger a sharp correction in memory stocks that have rallied strongly in markets such as Korea this year,” Ferres said.

He added that portfolio rotation would likely continue to favour emerging markets, but investors needed to exercise greater caution regarding memory stocks in Korea and Taiwan, particularly following their outstanding performance and significant re-rating.

Hong Kong’s Hang Seng Index opened 0.09 per cent higher, whilst Australia’s S&P/ASX 200 also recorded a gain of 0.18 per cent.

With limited short-term catalysts and thin trading volumes due to holidays, Asian market movements were expected to remain constrained whilst awaiting fresh direction from forthcoming global economic data.

Market participants are now looking ahead to key data releases later this week, including global manufacturing surveys and the United States fourth-quarter 2025 GDP report. The consensus forecast projects US economic growth of 3 per cent on an annualised basis, slowing from 4.4 per cent in the previous quarter but still reflecting the resilience of the world’s largest economy.