Asia-Pacific markets retreated on Monday, tracking a Friday sell-off on Wall Street where investors took profits in high-flying AI-related stocks and shifted toward value-oriented sectors.

Regional Market Performance
South Korea’s Kospi fell 1.84% to close at 4,090.59, led by declines in major tech names: SK Hynix dropped 2.98% and Samsung Electronics slid 3.76%. The small-cap Kosdaq edged up 0.16%. Japan’s Nikkei 225 declined 1.31%, while the broader Topix index rose 0.22%. Australia’s S&P/ASX 200 lost 0.72%, closing at 8,635.

Japan's Tankan Survey Shows Improved Sentiment
Japan released its fourth-quarter Tankan survey, revealing business optimism among large manufacturers rose to +15, the highest level in four years and slightly above the previous quarter's reading of +14. The non-manufacturing index remained robust at +34, indicating continued strength in the services sector.

China's Economic Data Falls Short
Markets digested key November economic data from China, which broadly missed expectations. Retail sales grew 1.3% year-on-year, sharply below the forecast of 2.8% and a slowdown from October's 2.9% increase. Industrial production expanded 4.8%, slightly below the anticipated 5% growth and the prior month's 4.9% rise. Hong Kong's Hang Seng index fell 0.79%, and mainland China's CSI 300 declined 0.63%.

U.S. Market Context
The pullback in Asia follows a Friday session in which U.S. indexes retreated from recent highs. The S&P 500 fell 1.07%, and the Nasdaq Composite dropped 1.69%, pressured by a sharp sell-off in AI-related shares. Broadcom plunged over 11%, while AMD, Palantir Technologies, and Micron also declined.

Investor sentiment reflects a cautious pause in the AI rally. As noted by Jed Ellerbroek of Argent Capital Management, "Investors are definitely skittish as it relates to AI — not outright pessimistic, but just kind of cautious and nervous and hesitant."