Asia report: Markets mixed as investors assess fresh data

(Sharecast News) - Asia-Pacific markets ended mixed on Monday as investors digested a wave of economic data and monitored developments in US-China trade negotiations.

China's manufacturing activity contracted for a third consecutive month in June, raising expectations for further stimulus to counter economic headwinds.

"US stock-index futures rose, and Asian markets increased as progress in various trade talks enhanced investor confidence," said TickMill market strategy partner Patrick Munnelly.

"Asian markets saw an uptick, with the Nikkei 225 gaining after Japan's chief negotiator prolonged his stay in the US for additional discussions.

"The Canadian dollar gained strength after Canada cancelled its digital services tax to facilitate negotiations with the US."

Munnelly noted that the dollar index fell as the Senate continued discussions regarding president Donald Trump's $4.5trn tax cut proposal, adding that the index had its worst start to a year since at least 2005.

"US stocks reached a new all-time high on Friday for the first time since February, demonstrating confidence that the economy can withstand policy uncertainties.

"In April, Trump temporarily halted tariffs on numerous trade partners for three months, providing a boost to stock prices.

"An index of Asian stocks is projected to rise over 4% for a second consecutive month as investors overlook tariff concerns and recent Middle Eastern tensions."

Markets mixed as investors parse economic data

In Japan, the Nikkei 225 rose 0.84% to 40,487.39, supported by strong gains in Tokyo Electric Power, up 6.12%, Olympus Corporation, which climbed 5.6%, and SoftBank Group, up 4.32%.

The broader Topix index added 0.43% to close at 2,852.84.

Chinese markets advanced despite the weak manufacturing data.

The Shanghai Composite gained 0.59% to 3,444.43, while the Shenzhen Component rose 0.84% to 10,465.12.

Top performers in Shanghai included Jihua Group, Shanghai Shentong Metro, and QuMei Home Furnishings, all hitting their 10% daily limit.

Hong Kong's Hang Seng Index underperformed, falling 0.87% to 24,072.28, dragged lower by Li Auto, down 3.25%, Meituan, which lost 3.17%, and Longfor Properties, down 2.83%.

South Korea's Kospi 100 edged up 0.4% to 3,096.81.

Gains were led by SK Innovation, which soared 25.15% following upbeat earnings guidance, while NCsoft rose 11.2% and LS Industrial Systems added 4.91%.

Australia's S&P/ASX 200 rose 0.33% to 8,542.30, with NIB Holdings jumping 9.43%, James Hardie Industries up 7.06%, and Macquarie Group gaining 3.87%.

New Zealand's S&P/NZX 50 was also higher, up 0.15% to 12,602.82, driven by SkyCity Entertainment Group, which rose 4.44%, Heartland Group up 3.9%, and Vector gaining 3.82%.

In currencies, the dollar was last down 0.32% on the yen to trade at JPY 144.18, while it remained little changed against the Aussie at AUD 1.5293, and lost 0.27% on the Kiwi, changing hands at NZD 1.6471.

Oil prices retreated, with Brent crude futures last down 0.34% on ICE at $67.54 per barrel, and the NYMEX quote for West Texas Intermediate down 0.47% to $65.21.

China manufacturing sector shrinks for third month in a row

In economic news, China's manufacturing sector shrank for the third consecutive month in June, although signs of stabilisation emerged.

The official purchasing managers' index (PMI) edged up to 49.7 from 49.5 in May, remaining below the 50-point mark that separates growth from contraction, in line with analysts' expectations.

Output and new orders improved, with sub-indices rising to 51 and 50.2 respectively, suggesting a modest pickup in production and demand.

However, factory inventories and employment continued to weaken, falling to 48 and 47.9.

The non-manufacturing PMI rose to 50.5 from 50.3, as construction activity accelerated to 52.8 while services growth softened slightly to 50.1.

Japan's industrial production rose 0.5% in May from the previous month, missing the 3.5% increase forecast by economists.

Gains were driven by production machinery and motor vehicles, while weakness persisted in transport equipment, chemicals, and electronic components, according to preliminary figures from the Ministry of Economy, Trade and Industry.

South Korea's factory output meanwhile contracted for a second month, dropping 2.9% in May on a seasonally adjusted basis, a sharper decline than the 0.1% contraction expected.

That followed a 0.6% drop in April.

On an annual basis, production was up just 0.2%, a sharp slowdown from April's 5.1% growth.

Meanwhile, retail sales were flat in May after a 0.9% decline the previous month, marking the weakest level since August 2024.

Reporting by Josh White for Sharecast.com.