Asia report: Markets rise as investors buy latest tariff dip

(Sharecast News) - Stocks across the Asia-Pacific region rose on Tuesday, as investors appeared unfazed by US president Donald Trump's renewed threats to impose steep tariffs on Indian exports.

Trump accused India of profiting from cheap Russian oil and reselling it for profit, vowing on his Truth Social platform to respond with "significantly" higher tariffs.

"Asian stocks increased as dip buying became the dominant theme alongside rising expectations of possible interest rate reductions," said TickMill market strategy partner Patrick Munnelly.

"Oil prices stabilised after a three-day decline, as investors assessed risks to Russian oil supplies, particularly with US president Donald Trump intensifying his threats against India's oil purchases from Moscow.

"Market participants are increasingly anticipating interest rate reductions by the Federal Reserve after last Friday's disappointing jobs report, which negatively impacted stocks and caused a significant rise in bond prices."

Munnelly noted that equities had "sharply recovered" from their April lows, buoyed by optimism that American businesses could withstand the effects of tariffs and that the US economy may evade a recession.

"In Japan, a recent auction of 10-year government bonds saw weaker demand, influenced by poor US employment data from the previous week that heightened speculation of an imminent Fed rate cut, leading to lower yields.

"On the tariffs front, the European Union anticipates that Trump will announce executive orders this week to formalise reduced tariffs for cars and provide exemptions for certain industrial products like aviation parts, as per sources familiar with the situation.

"In the meantime, Switzerland has expressed its resolve to win over Washington following last week's surprising announcement of 39% tariffs on exports to the US."

Most markets rise despite Trump's latest tariff threats

Japan's Nikkei 225 gained 0.74% to close at 40,587.00 points, buoyed by strength in defence and industrial stocks.

Mitsubishi Heavy Industries rose 5.72% after winning an AUD 10bn contract to build 11 new frigates for the Australian Navy.

The ships, based on Mitsubishi's Mogami-class design, would be partially built in Japan with the remainder constructed in Australia by Austal.

NTN Corporation led gains in Tokyo, rising 15.05%, followed by GS Yuasa with a 7.45% increase and Furukawa Electric up 7.17%.

The broader Topix index also advanced, closing 0.7% higher at 2,936.54.

In China, the Shanghai Composite added 0.96% to finish at 3,617.60, with the biggest gainers including Shanghai Shenda, up 10.12%, Maanshan Iron & Steel, which rose 10.09%, and Shanghai Industrial Development, which climbed 10.06%.

The Shenzhen Component also moved higher, rising 0.59% to 11,106.96.

Hong Kong's Hang Seng Index increased by 0.68% to close at 24,902.53, led by a 7.73% jump in BYD Electronic International.

Lenovo Group gained 5.09%, while BOC Hong Kong rose 4.69%.

South Korea's Kospi 100 rose sharply, closing 1.48% higher at 3,225.84, after July consumer inflation figures matched expectations.

Shares in SK Biopharmaceuticals surged 15.92%, EcoPro Materials rose 11.91%, and Samsung SDI added 10.22%.

Australia's S&P/ASX 200 climbed 1.23% to 8,770.40, with Credit Corp Group leading the rally by jumping 16.19%.

Iluka Resources gained 8.65% and IDP Education rose 7.97%.

Austal, which would build eight of the 11 Australian frigates in partnership with Mitsubishi, advanced 7.94%.

New Zealand's S&P/NZX 50 index ended the day up 1.52% at 12,877.04.

KMD Brands gained 6.38%, Tourism Holdings rose 4.37%, and Infratil added 4.11%.

In currency markets, the dollar was last up 0.33% against the yen to trade at JPY 147.57, while it gained 0.11% on the Aussie to AUD 1.5479, and rose 0.25% against the Kiwi, changing hands at NZD 1.6970.

Oil prices fell despite broader market optimism, with Brent crude futures declining 0.84% on ICE to $68.18 per barrel, and the NYMEX quote for West Texas Intermediate dropping 1% to $65.63.

Inflation cools slightly in Korea, services sectors expand in Australia and Japan

In economic news, South Korea's inflation cooled slightly in July, while services activity in Australia and Japan expanded at a faster pace according to fresh data.

Meanwhile, Bank of Japan policymakers signalled a potential return to rate hikes if global trade tensions ease.

South Korea's consumer prices rose 2.1% in July compared with the same month last year, slightly below June's 2.2% increase, according to official data.

On a monthly basis, inflation accelerated to 0.2%, the fastest pace in four months, after no change in June.

Both annual and monthly figures were broadly in line with expectations.

In Australia, the services sector expanded at its strongest pace since March 2024.

The S&P Global flash Australia services purchasing managers' index (PMI) rose to 54.1 in July from 51.8 in June, with readings above 50 indicating growth.

It was driven by a sharp increase in domestic new business, while export demand stabilised following four consecutive months of contraction.

Real estate and business services led the gains, prompting firms to increase hiring and reduce backlogs for a third month.

However, cost pressures intensified due to higher material, fuel, and labour expenses, leading firms to raise prices at the fastest rate in nearly two years.

Despite that, business sentiment weakened to a nine-month low amid cost concerns and economic uncertainty, though some companies remained upbeat due to expansion plans and possible interest rate cuts.

Japan's services sector also saw solid growth, with the S&P Global services PMI rising to 53.6 in July from 51.7 in June.

That marked the fourth consecutive month of expansion and the fastest growth since February.

New orders increased at the quickest pace in three months, supported by improved domestic demand and business development efforts.

However, foreign demand declined for the first time since December, falling at the steepest rate in over three years, as firms reported fewer tourists due to concerns about recent earthquakes.

Employment levels were unchanged, ending a 21-month streak of job creation, which contributed to a rise in backlogs. Input cost inflation eased to a 17-month low but remained elevated, prompting companies to raise output prices.

Business confidence slipped to a three-month low, reflecting caution amid global uncertainties.

Minutes from the Bank of Japan's June policy meeting meanwhile revealed that several board members were prepared to resume interest rate increases if trade tensions, particularly with the United States, subsided.

At the meeting, held on 16-17 June, the BoJ kept its policy rate steady at 0.5% and opted to slow its balance sheet reduction starting next year.

Despite inflation running slightly above forecasts and wages showing solid growth, most members favoured maintaining rates in the near term due to downside risks from escalating US tariffs.

However, some members noted that if trade friction eased, the bank should "flexibly and nimbly" return to a tightening path.

Reporting by Josh White for Sharecast.com.