Asian stocks retreated on Tuesday as investors weighed the prospect of a U.S. default and soft economic data from China. The Nikkei 225 index reversed early gains and fell 0.6%, while the TOPIX lost 0.4%. Chinese indexes were also headed for steep losses in May, with the Shanghai Shenzhen CSI 300 and Shanghai Composite indexes falling about 0.5% each. Hong Kong-listed Chinese stocks pulled the Hang Seng 0.4% lower.
The prospect of a U.S. default kept Asian markets on edge, as traders feared the economic fallout from such an event. Soft economic indicators from China also dampened sentiment toward Asian stocks. South Korea’s KOSPI rose 0.7%, aided by data showing a recovery in consumer sentiment, while Australia’s ASX 200 rose 0.3%. In Southeast Asia, Thailand’s SET Index fell 0.2%, remaining under pressure as markets awaited the formation of a new government.
Overall, investors remain cautious as they await further developments in the U.S. debt ceiling talks and economic data from China.