Asian markets opened Tuesday to a mix of geopolitical tensions, central bank decisions, and shifting expectations around US monetary policy.
From China’s objections to Japan’s recent remarks on Taiwan, to the Reserve Bank of Australia’s decision to leave rates unchanged, and to investor caution ahead of the Federal Reserve’s upcoming move, the region’s sentiment remained subdued.
Meanwhile, new comments from US President Donald Trump on Nvidia’s China chip exports added another layer to an already complex global tech landscape.
China increases Japan criticism over Taiwan comments
China’s special representative on Korean affairs, Liu Xiaoming, confirmed that Chinese Foreign Minister Wang Yi and German Foreign Minister Johann Wadephul discussed Taiwan during their meeting in Beijing.
The conversation also covered recent remarks by Japan’s leadership.
Wang reiterated Beijing’s criticism of Japanese Prime Minister Sanae Takaichi’s comment suggesting Japan could use force over Taiwan.
He argued the statement contradicted Japan’s previous commitments to China and undermined post–World War II settlements.
Liu reaffirmed Beijing’s stance that “ironclad” facts confirm Taiwan is part of China and that the issue has been politically and legally settled for decades.
He warned that “plotting ‘Taiwan independence’ means splitting China’s territory,” and that supporting it constitutes interference in China’s internal affairs.
Reserve Bank of Australia holds rates at 3.6%
The Reserve Bank of Australia kept its benchmark interest rate unchanged at 3.6% in December, aligning with market expectations.
The decision was unanimous, with policymakers noting that inflation risks may take longer to evaluate.
“The recent data suggest the risks to inflation have tilted to the upside, but it will take a little longer to assess the persistence of inflationary pressures,” the RBA said.
Asian markets drift as investors await Fed signals
Asian equities traded weaker as investors positioned for a US rate cut and evaluated the likelihood of a shallow easing cycle.
MSCI’s Asia-Pacific ex-Japan index slipped 0.68%, Japan’s Nikkei edged down 0.04%, and South Korea’s Kospi fell 0.37%.
Analysts expect a cautious tone from Fed Chair Jerome Powell, with some projecting only one rate cut in 2026.
Traders are currently pricing in 77 basis points of easing next year.
Currency markets remained steady. The dollar index held at 99.09, on track for its biggest annual decline since 2017.
The yen stabilized after a 7.5-magnitude earthquake in northeastern Japan injured at least 30 people and forced evacuations.
Commodities were mixed: gold fell 0.15% to $4,182.11 per ounce, while Brent crude hovered at $61.96.
Indian markets also slipped. The Nifty 50 fell 0.37% to 25,865.30, and the Sensex dropped 0.55% to 84,796.18.
Trump says Nvidia can export H200 chips to China under 25% US fee
US President Donald Trump announced that Nvidia will be allowed to export its H200 artificial-intelligence chips to “approved customers” in China, provided the US government receives a 25% cut of the revenue.
He said Chinese President Xi Jinping “responded positively” to the proposal.
Trump added that the same framework will apply to AMD, Intel, and other US chipmakers.
Nvidia and AMD had already agreed in August to share 15% of their China chip revenue with Washington.
The H200 chip is a higher-grade model than the H20 chip previously designed for China.
Nvidia shares rose about 2% after hours on the news.
The company said the policy “strikes a thoughtful balance” that supports American jobs and manufacturing.
Semiconductors remain central to the US–China technology rivalry, highlighted by trade frictions and earlier disputes over China’s rare-earth export controls.
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