Asia report: Markets mixed on trade developments, manufacturing data
By Josh White
Date: Tuesday 01 Jul 2025
(Sharecast News) - Asia-Pacific markets delivered a mixed performance on Tuesday as investors weighed record gains on Wall Street against growing uncertainty over US trade policies.
The 90-day tariff reprieve granted by US president Donald Trump is set to expire next week, raising concerns about the potential reimposition of tariffs.
US Treasury secretary Scott Bessent noted overnight that some countries were negotiating "in good faith", but warned that tariffs could "spring back" if talks faltered.
Canada withdrew its planned digital services tax on Monday in a bid to ease tensions after Trump abruptly ended trade discussions with Ottawa.
"Stocks entered the second half of the year with a continuation of a record-setting rally, driven by optimism that the US economy can cope with the uncertainties stemming from president Donald Trump's tariff policies," said TickMill market strategy partner Patrick Munnelly.
"Wall Street's investors pushed stock prices to historic highs at the close of a robust quarter, fueled by optimism that the US is nearing concrete agreements with its primary trading partners.
"Expectations that the Federal Reserve will resume interest rate cuts have contributed to one of the best first halves for Treasuries in five years."
However, Munnelly noted that the broader unpredictability surrounding Trump's tariff and fiscal policies regarding the long-term implications for the US economy was reflected in the dollar's 10.8% decline in the first half of the year, marking its worst performance for that period since 1973.
"Concerns about the growing deficit associated with the president's $3.3trn tax and spending proposal, which is currently being debated in the Senate, have further compounded these worries.
"Japanese markets dropped ... as Trump hinted at imposing additional tariffs on Japan, leading to a stronger yen that negatively impacts exporters.
"This new wave of negotiations with Japan coincides with the impending 9 July deadline for increased tariffs on multiple trading partners."
Markets mixed as investors watch for trade developments
In Japan, the Nikkei 225 dropped 1.24% to 39,986.33, pressured by steep losses in major stocks including DeNA, down 4.75%, Otsuka Holdings, which fell 4.49%, and Fast Retailing, off 4.16%.
The broader Topix index also declined 0.73% to 2,832.07.
Chinese equities edged higher despite the broader uncertainty - the Shanghai Composite gained 0.39% to close at 3,457.75, with strong rallies from Jinzhou Port Co, up 10.26%, Huadian Liaoning Energy Development, up 10.17%, and Chongqing Zaisheng Technology, which rose 10.1%.
The Shenzhen Component added 0.11% to 10,476.29.
Hong Kong markets were shut for the Special Administrative Region Establishment Day holiday.
South Korea's Kospi 100 advanced 0.31% to 3,106.50, buoyed by strong performances from SK Holdings, which jumped 9.54%, Lotte Corporation, up 8.45%, and LG Chemicals, which gained 8.27%.
Australia's S&P/ASX 200 was nearly flat, inching down 0.01% to 8,541.10.
G8 Education dropped 4.66%, Healius lost 4.46%, and SGH slipped 2.87%, offsetting broader gains in the market.
New Zealand outperformed the region, with the S&P/NZX 50 climbing 1.05% to 12,734.53.
Skellerup Holdings led gains in Wellington with a 5.1% rise, followed by Fisher & Paykel Healthcare Corporation, which added 3.8%, and Fletcher Building, up 3.46%.
In currency markets, the dollar was last down 0.81% on the yen to trade at JPY 142.86, while it slipped 0.11% against the Aussie to AUD 1.5179, and lost 0.37% on the Kiwi, changing hands at NZD 1.6343 as investors grew cautious over Trump's fiscal and trade agenda.
Oil prices were little changed, with Brent crude futures last down 0.06% on ICE at $66.70 per barrel, and the NYMEX quote for West Texas Intermediate also off 0.06%, at $65.07.
Japan manufacturing sector expands, South Korea's still in contraction
In economic news, Japan's manufacturing sector expanded in June for the first time in over a year, driven by a rise in output despite continued weakness in demand.
The au Jibun Bank flash manufacturing purchasing managers' index rose to 50.4 from 49.4 in May, marking the first reading above the 50 threshold that separates growth from contraction since May last year.
However, both new orders and export sales continued to decline, signaling persistent demand-side pressures.
Meanwhile, the Bank of Japan's closely watched Tankan survey showed an improvement in business sentiment among large manufacturers.
The headline index rose to +13 in June, up from +12 in March and beating analysts' expectations of +10.
Sentiment among large non-manufacturers edged down slightly to +34 from +35, in line with forecasts.
The results would factor into the BoJ's upcoming policy review at its meeting at the end of July.
In contrast, South Korea's manufacturing sector remained in contraction.
The S&P Global South Korea manufacturing PMI rose slightly to 48.7 in June from 47.7 in May but remained below the 50 mark for the fifth consecutive month.
The data pointed to ongoing, though softer, declines in output and new orders.
Firms also reduced purchasing activity and cut jobs amid efforts to control inventories.
Reporting by Josh White for Sharecast.com.
Email this article to a friend
or share it with one of these popular networks:
You are here: news
10 Lower Thames St,
London EC3R 6EN