Broader Asian markets all dropped as risk appetite remained strained

Most Asian stocks dropped on Tuesday, extending deep losses from the prior session.

Japanese shares dipped even as Prime Minister Sanae Takaichi said she will dissolve parliament on Friday and hold a snap election in early-February– a move that could herald more fiscal stimulus in the country.

Markets took fleeting support from Chinese gross domestic product figures, while China’s central bank also left a key interest rate unchanged on Tuesday.

The Nikkei 225 and TOPIX indexes shed nearly 1% apiece on Tuesday.

Takaichi said on Monday evening that she will dissolve Japan’s lower house this week and hold a snap election on February 8.

The election will largely see Takaichi seek more voter backing for fiscal stimulus, tax cuts, and a plan to raise defence spending.

While Japanese markets had initially cheered the prospect of more fiscal stimulus, doubts emerged over just how Tokyo will fund this increased spending, sparking a sharp selldown in Japanese government bonds.

Japan 10-Year crossed 4% and reached their highest levels in 27 years on Tuesday.

Broader Asian markets all dropped as risk appetite remained strained.

Shanghai Shenzhen CSI 300 and Shanghai Composite indexes dropped nearly 0.5% apiece, while Hang Seng declined 0.3%.

Mainland markets took limited support from Chinese gross domestic product data showing the economy met Beijing’s 5% growth target in 2025. Fourth quarter GDP showed growth slowing from the prior quarter.

ASX 200 dropped 0.6%, pressured by a near 2% drop in mining giant BHP Group Ltd after it clocked record-high iron ore production, but warned of lower realized prices on future sales of the commodity.

KOSPI remained an outperformer, reversing early losses to trade flat near record highs. A rally in Hyundai had pushed the index to new highs on Monday.