Asian Shares Retreat Ahead Of Fed Decision

(RTTNews) - Asian stocks ended mostly lower on Tuesday amid heightened Middle East tensions and concerns over the pace of artificial intelligence development.

Investors also digested a slew of Chinese data and looked ahead to Wednesday's Federal Reserve policy meeting and Friday's Bank of Japan rate decision for directional cues.

Regional bonds followed U.S. Treasuries lower, with Japan's 10-year yields surpassing 3 percent. The U.S. dollar held near a two-week high after the 10-year Treasury yields hit a 16-year peak on hawkish Fed bets.

Gold extended losses and was down 0.6 percent at $4,272 an ounce after falling over 1 percent in the previous session. Brent crude futures rose nearly 2 percent toward $108 a barrel on supply disruption concerns.

Iran claimed that a supertanker caught fire after striking naval mines while attempting to pass through a restricted area south of the Strait of Hormuz. Tehran also rejected renewed peace talks with the U.S. until its demands are met.

Elsewhere, Ukrainian President Volodymyr Zelenskyy said that Ukraine is prepared to take "de-escalatory steps" if Russia does the same, contradicting U.S. President Trump's claim earlier that both had agreed not to strike each other's energy targets.

China's Shanghai Composite index dipped 0.54 percent to 3,864.28 as new data highlighted persistently weak domestic demand.

China's industrial production growth accelerated in August, but bank lending disappointed after a record contraction in July and retail sales registered a weaker expansion, separate set of data revealed today.

Fixed-asset investment declined by 7.2 percent year-on-year in the January-August 2026 period, matching expectations.

Hong Kong's Hang Seng index fell 1.00 percent to 24,667.24 in the absence of new catalysts. After U.S. tech leaders raised concerns over AI development, China said, "fearmongering, confrontation and vicious competition will only disrupt the process of global AI governance and serve the interests of no one."

Japanese markets fluctuated before closing lower for a third consecutive session. The Nikkei average finished marginally lower at 63,484.10 while the broader Topix index fell 0.52 percent to 4,037.16.

While banks fell sharply on interest-rate concerns, technology investor SoftBank soared 7.5 percent and memory-chip maker Kioxia Holdings advanced 2.3 percent.

Seoul stocks fell notably to extend losses for a fourth consecutive session amid rising macro uncertainties. The Kospi index dropped 0.85 percent to 6,627.26, dragged down by defense stocks.

Hanwha Aerospace slumped 6.5 percent and LIG Defense & Aerospace lost 4.8 percent. Australian markets fell to an 11-week low, with rising oil prices and fading hopes of an artificial intelligence boom keeping investors on edge.

The benchmark S&P/ASX 200 dropped 0.88 percent to 8,672.50 as lower copper prices weighed on the mining sector.

Financials also dragged on rising bets of a September Reserve Bank interest rate increase. The broader All Ordinaries index closed 0.84 percent lower at 8,849.30.

Across the Tasman, New Zealand's benchmark S&P/NZX-50 index fell 0.56 percent to 13,484.22, extending losses for a fourth consecutive session and reaching its lowest level since June 24.

U.S. stocks ended well off their day's lows overnight as crude oil prices gave back some ground after soaring nearly 5 percent in early trade following President Donald Trump's claim that Russia and Ukraine have agreed to stop attacking each other's energy targets.

Trump also reiterated that Iran wants to "make a deal, quickly and badly" and that "oil is flowing through the Hormuz Strait."

Fears of a tightening oil market rattled investors after Saudi Arabia closed a critical pipeline that bypasses the Strait of Hormuz following a drone attack.

Additionally, a highly anticipated meeting in Oman between Iran and Gulf States was postponed at the last minute in the absence of conditions conducive to a constructive dialogue.

The tech-heavy Nasdaq Composite ended 0.6 percent lower, after having tumbled as much as 1.3 percent earlier as industry leaders called for a slowdown in the pace of AI development.

President Trump dismissed the warning, saying a slowdown was not needed and would jeopardize America's lead in AI over China.

The S&P 500 dropped half a percent and the narrower Dow eased 0.3 percent.