Asian markets showed mixed performance on Wednesday, as investor sentiment was buffeted by signals from Japan’s latest tankan survey, interest rate decisions in India, and uncertainty over global policy and trade dynamics.

In Tokyo, the Bank of Japan’s (BOJ) quarterly tankan survey revealed that large manufacturers’ sentiment improved for the second consecutive quarter, with the headline diffusion index rising to +14 in September from +13 in June—the highest level since December 2024. Meanwhile, sentiment among non-manufacturers held steady at +34. This improved business mood underpins growing expectations that the BOJ may implement a further rate hike in the near future.

However, some caution remains: firms surveyed expect conditions to deteriorate over the coming months, citing concerns such as weaker U.S. demand, higher labor costs, and trade tensions.

In India, the Reserve Bank of India (RBI) held its policy rate steady at 5.5%, as widely expected, while revising growth and inflation projections. The central bank took a neutral stance, balancing its duty to support growth with price stability concerns.

Markets in Asia were also reacting to separate global pressures. With U.S. budget negotiations on edge, a looming government shutdown may delay critical economic data—adding risk to sentiment across markets. Technology and semiconductor names gained traction in South Korea and Taiwan, while Japan’s Nikkei fell after rate hike jitters weighed on exporters.

Overall, the region’s markets reflected a delicate balancing act: optimism from Japan’s business survey, caution around monetary policy stances, and external risks from U.S. fiscal uncertainty.