Asia report: Markets mixed amid ongoing US tariff concerns
By Josh White
Date: Tuesday 03 Jun 2025
(Sharecast News) - Asia-Pacific markets ended mixed on Tuesday as investors digested weak Chinese manufacturing data and growing geopolitical tensions.
A private survey showed China's factory activity contracted at the fastest pace since September 2022, with the Caixin manufacturing PMI falling sharply in May, highlighting a drop in new export orders amid escalating US tariffs.
China pushed back against US accusations of violating a trade pact, accusing Washington of breaching the agreement.
Meanwhile, the European Union warned that president Donald Trump's plan to double steel tariffs to 50% could trigger retaliatory measures, further straining global trade talks.
"US equity-index futures declined following a late rally in the S&P 500 on Monday, as investors anticipated updates on trade negotiations between president Trump and China's Xi [Jinping]," said TickMill market strategy partner Patrick Munnelly.
"Contracts for the S&P 500 and Nasdaq 100 fell, while those for European equities remained stable.
"The dollar strengthened against all of its group-of-10 peers."
Munnelly noted that Asian markets showed little change overall, although Hong Kong gained ground due to potential stimulus measures.
"Treasuries remained steady after a successful auction of Japanese government bonds, which saw strong demand.
"The offshore yuan moved closer to its onshore equivalent as the US called for discussions between Trump and Xi.
"In the meantime, China's manufacturing sector experienced its most significant downturn since September 2022."
Markets mixed as US tariff concerns linger
In Japan, the Nikkei 225 slipped 0.06% to 37,446.81, with losses led by Suzuki Motor down 4.51%, Tokyo Gas off 3.43%, and Chugai Pharmaceutical shedding 3.03%.
The broader Topix index fell 0.22% to 2,771.11.
Mainland Chinese markets posted modest gains despite the poor factory reading.
The Shanghai Composite rose 0.43% to 3,361.98, while the Shenzhen Component edged up 0.16% to 10,057.17.
Among the top performers in Shanghai were WPG, Beijing Cuiwei Tower, and Shanghai Vohringer Wood Product, each up more than 10%.
Hong Kong's Hang Seng Index rallied 1.53% to 23,512.49, led by a 5.82% surge in Li Auto, CK Hutchison rising 4.33%, and BYD Co advancing 3.94%.
CK Hutchison was in focus after its UK subsidiary Three - the smallest of the country's four mobile network operators - completed its merger with Vodafone's UK operations to form VodafoneThree.
South Korean markets were closed for a national holiday due to the presidential election.
In Australia, the S&P/ASX 200 climbed 0.63% to 8,466.70, with gains in Sydney driven by Tabcorp, up 5.8%, Viva Energy rising 5.49%, and Austal gaining 5.23%.
New Zealand's S&P/NZX 50 declined 0.74% to 12,327.23, with A2 Milk Company plunging 5.41%, KMD Brands down 4.92%, and Oceania Healthcare falling 4.76%.
In currency markets, the dollar was last up 0.09% on the yen to trade at JPY 142.84, as it gained 0.56% against the Aussie to AUD 1.5482, and advanced 0.43% on the Kiwi, changing hands at NZD 1.6642.
Oil prices were in the green, with Brent crude futures last up 0.29% on ICE at $64.82 per barrel, and the NYMEX quote for West Texas Intermediate ahead 0.385 at $62.72.
China manufacturing sector still contracting in May
In economic news, China's manufacturing sector contracted in May at its fastest pace since September 2022, according to a private survey released Tuesday, heightening pressure on Beijing to introduce further stimulus.
The Caixin/S&P Global manufacturing purchasing managers' index fell to 48.3, well below the 50.6 forecast by economists and marking the first reading below the 50-point threshold since September 2023.
It signalled a renewed slowdown in factory activity, driven in part by weaker demand and the impact of US tariffs.
In Australia, the current account deficit narrowed slightly in the first quarter of 2025 but remained larger than expected.
The seasonally-adjusted deficit came in at AUD 14.7bn, compared with a revised AUD 16.3bn in the prior quarter.
While the figure was worse than the AUD 13.1bn shortfall anticipated by economists, the improvement suggested some easing of external imbalances despite weaker global demand.
Reporting by Josh White for Sharecast.com.
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