Asian Markets Rally on Tech and Energy Gains – Investors Eye U.S. Shutdown Risk

Mixed Index Moves: On Monday (Sept 29), most Asian benchmarks rose. Hong Kong’s Hang Seng jumped about 1% to ~26,518, and South Korea’s KOSPI gained ~1.3% to ~3,430 ^[1] ^[2]. China’s CSI 300 index added ~0.7% (to ~4,551), while the Shanghai Composite was roughly flat around 3,832 and the Shenzhen Component was up ~0.3% ^[3] ^[4]. By contrast, Japan’s Nikkei 225 slipped about 0.8% (to ~44,894) despite finishing the month ~5% higher ^[5] ^[6]. India’s markets opened higher: the Nifty 50 rose ~0.43% to ~24,761 and the Sensex was up ~0.39% to ~80,745 ^[7].
Sector Movers: Energy and materials stocks led gains. In India, energy indices jumped ~1.2–1.5% on optimism about stable fuel prices, lifting majors like BPCL and HPCL ^[8]. Oil India surged ~2.2% on news of a natural gas discovery offshore ^[9]. In contrast, consumer staples lagged: Hindustan Unilever fell ~1.5% after downgrading its quarterly outlook ^[10]. Technology and auto shares were mixed – Japan’s weaker yen (USD/JPY ~148.9 ^[11]) capped exporters, while South Korean chipmakers likely benefited from record export estimates (semiconductor shipments were up 27% in early Sept ^[12]).
Economic Data & Policy: China’s economy remains sluggish. Analysts forecast September factory PMI around 49.6 (below 50) – the sixth month of contraction ^[13]. Investors are also awaiting China’s Golden Week holidays. In South Korea, Reuters polls project September exports up +7.2% YoY, the fastest growth in 13 months, led by tech and calendar effects ^[14] ^[15]. In India, focus is on the Reserve Bank of India meeting (Sept 30). A Reuters survey shows ~75% of economists expect a pause, though a few banks see scope for a 25bp cut given slowing growth ^[16] ^[17].
Global Factors: U.S. politics and data loomed large. Traders grew nervous over a possible U.S. government shutdown starting Oct 1, which would delay key data (like the Sep payrolls report) and coincide with new Trump tariffs on heavy trucks and drugs ^[18]. Still, robust U.S. inflation data (Aug PCE +0.3% MoM) came in as expected, bolstering expectations for Fed rate cuts. Markets now put ~90% odds on an October cut ^[19]. Morgan Stanley notes the PCE print “keeps rate cut expectations intact” ^[20]. The dollar eased (index ~97.9) and was at ~¥148.9 by Monday afternoon ^[21].
Analyst Commentary: Strategists downplayed the shutdown risk: Bank of America estimates a brief shutdown would shave only ~0.1% off GDP per week and have minimal market impact ^[22]. Still, many investors remain wary. Abhishek Goenka (CIO of Billionz) notes that “the absence of negative developments is being perceived constructively, but sentiment remains restrained by steep U.S. tariffs and the H-1B visa fee hike” ^[23]. He expects India’s Nifty to trade in a ~24,500–25,000 range with a mildly weakening bias in the near term ^[24].
Outlook: Caution is advised as multiple events converge. Asia’s central bank calendar is busy: India’s RBI meets Wed and is widely expected to hold rates (though a small cut can’t be ruled out ^[25] ^[26]). The Bank of Japan recently showed unexpected hawkish dissent, raising the odds of an October rate hike ^[27] (a dynamic that has kept the yen firm). Regionally, investors will watch U.S. Treasury yields, Fed communication, and geopolitics (tariffs, China-U.S. talks). For now, Asian stocks may see further momentum from the improving tech cycle and supportive flows, but will likely tread carefully until U.S. funding and economic uncertainties clarify.

Sources: Latest market moves and data from Reuters and news outlets ^[28] ^[29] ^[30] ^[31] ^[32] ^[33]. Analyst comments and forecasts from Reuters interviews ^[34] ^[35]. (All figures as of market close Sept 29, 2025.)