05:39 AM EST, 01/08/2026 (MT Newswires) -- Asian stock markets faded Thursday, undercut by strained Beijing-Tokyo relations regarding Taiwan and bearish Wall Street cues.

Hong Kong, Shanghai and Tokyo finished in the red, as did most other regional exchanges.

In Japan, the Nikkei 225 opened lower and declined thereafter, finishing off 1.6% as traders mulled possible export restrictions imposed by China, including controls on rare earths vital to chemical and tech industries.

The benchmark Nikkei 225 fell 1.6% to 51,117.26, as losing issues outnumbered gainers 148 to 74.

Leading the upside was Sumitomo Pharma, up 7.8%, while tech-sector financiers SoftBank declined 7.6%.

In economic news, real wages in Japan in November fell 2.8% from a year earlier, as pay lagged inflation, reported the Ministry of Health, Labor and Welfare.

The tepid real wage picture challenges Bank of Japan plans for strong demand for labor to boost pay, and thus consumer spending, to give a lift to the boarder economy.

In Hong Kong, the Hang Seng Index opened lower and could not recover, closing down 1.6% as traders awaited pending economic data from mainland China, and took cues from Wall Street futures flashing red.

The broad gauge Hang Seng fell 309.64 to 26,149.31, as losing issues outnumbered gainers 59 to 28. The Hang Seng TECH Index lost 1.1% on the day, while the Mainland Properties Index edged up 0.2%.

Leading the upside was Sun Hung Kai Properties, gaining 3.2%, while computer-maker Lenovo declined 5.6%.

On the mainland, the Shanghai Composite fell 0.1% to 4,082.98.

On the other regional exchanges, the S. Korean KOSPI was flat; the Taiwan TWSE declined 0.3%; the Australian ASX 200 added 0.3%; the Singapore Straits Times Index declined 0.2%, and the Thai Set fell 2.1%. In late trading in Mumbai, the Sensex was down 0.9%.

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