Asian stock markets moved up and down on Wednesday after starting the week strong, as investors tried to make sense of weak economic data from the United States.
The main concern came after new figures showed that US retail sales did not grow at all in December. In November, sales had increased by 0.6 percent, so the sudden slowdown raised questions. On one hand, weaker consumer spending gives the Federal Reserve more room to cut interest rates. On the other hand, it signals that American consumers — who drive much of the US economy — may be feeling pressure.
Wall Street had a mixed session. The Dow Jones managed to edge up to another record high. But the S&P 500 and Nasdaq slipped, with technology stocks leading the losses. Many investors are starting to worry that tech shares, especially those linked to artificial intelligence, may be overvalued after huge gains and massive spending in the sector.
Markets are now waiting for more important data. Key US jobs numbers are due soon, followed by inflation figures later in the week. These reports could give a clearer signal about what the Federal Reserve will do at its next policy meeting in March.
After the weak retail sales data, traders increased their expectations for rate cuts this year. According to Bloomberg, markets are now pricing in two cuts with a rising chance of a third. Still, not everyone at the Fed agrees that cuts should come quickly.
Cleveland Fed President Beth Hammack said she prefers patience, noting that inflation remains elevated and that it may be better to wait and see how the economy reacts to previous rate reductions. Dallas Fed chief Lorie Logan also expressed concern about inflation staying stubbornly high, saying another cut would depend on clear cooling in the labor market.
Some analysts say markets are no longer reacting the same way they used to. In the past, weak data often pushed stocks higher because investors expected rate cuts. Now, there is more uncertainty. Concerns about the broader economy and risks in the AI sector are making investors more cautious.
In Asia, trading was slightly more positive overall. Hong Kong, Sydney, Seoul, Taipei, and Manila posted gains. Shanghai, Singapore, and Wellington slipped. Tokyo was closed for a holiday.
Chinese data showed that consumer inflation eased last month, but markets did not react strongly to the news.
The technology sector continues to draw attention. Investors are questioning whether the hundreds of billions of dollars poured into artificial intelligence will generate returns soon. Adding to concerns, Google’s parent company Alphabet raised more than $30 billion in debt in less than a day to expand its AI capabilities.
At the same time, new AI tools are entering the market. A startup called Altruist Corp launched a tax-strategy tool, raising fears that such software could take business away from traditional firms. Last week, sentiment was also shaken after Anthropic introduced a model that could replace several types of professional software, including tools used for legal work and marketing data.
In currency markets, the euro and pound edged higher against the dollar. The dollar weakened slightly against the yen.
Oil prices were also up. West Texas Intermediate rose about 0.7 percent to around $64.38 per barrel, while Brent crude gained 0.6 percent to trade near $69.20.
Overall, markets remain cautious. Investors are balancing hopes for lower interest rates with concerns about economic weakness, inflation risks, and growing uncertainty in the fast-moving AI sector.
