Asia markets stay cautious on tariffs; Japan stocks volatile after Ishiba election loss

Asia-Pacific markets traded mixed on Tuesday, despite overnight gains on the S&P 500 and Nasdaq, driven by optimism over strong corporate earnings. Investor caution intensified ahead of the August 1st U.S. tariff deadline, creating widespread uncertainty. Gold prices edged down to around $3,390 per ounce on Tuesday but remained close to a five-week-high. Malaysia’s annual inflation rate stood at 1.1% in June 2025, slightly below market consensus and May’s reading of 1.2%. This was the lowest print since February 2021. Singapore’s central bank will allocate SGD 1.1 billion to three asset managers—Avanda Investment Management, J.P. Morgan Asset Management, and Fullerton Fund Management—as part of its SGD 5 billion Equity Market Development Programme aimed at strengthening the local stock market. A 19% U.S. tariff on Indonesian exports could take effect earlier than the previously expected August 1 deadline, Indonesia’s chief economic minister Airlangga Hartarto said Monday. Japan ( NKY:IND ) fell 0.30% to around 40,200, while the broader Topix Index gained 0.9% to 2,860 in post-holiday trading on Tuesday. The Japanese yen hovered around 147.5 per dollar on Tuesday after gaining about 1% in the previous session, as investors continued to digest the weekend’s election outcome. Prime Minister Shigeru Ishiba’s party lost its upper house majority, adding a layer of domestic political volatility to regional sentiment. Crucially, Prime Minister Shigeru Ishiba is expected to stay in office, easing fears of political instability or a sudden resignation. On trade, Japan’s chief negotiator Ryosei Akazawa said Monday he still aims to strike a deal with the US by the August 1 deadline, despite the election setback. U.S. Treasury Secretary Scott Bessent said Monday that the U.S. will prioritize securing the best deal for itself in ongoing tariff negotiations with Japan. “Our priorities are not the internal workings of the Japanese government,” Bessent told CNBC. “Our priorities are giving the best deal for the American people.” China ( SHCOMP ) rose 0.37% to around 3,555, while the Shenzhen Component fell 0.3% to 10,970 on Tuesday, snapping a three-day winning streak, and the offshore yuan hovered around 7.17 per dollar on Tuesday, trading in a narrowband, as markets continued to monitor fresh cues on Sino-US trade developments. China created a total of 6.95 million new urban jobs in the first half of 2025, achieving 58% of its annual target, official data showed on Tuesday, according to Xinhua. Separately, China’s Conflux Network launched a new offshore yuan-based stablecoin, a move seen as bolstering long-term CNH liquidity and advancing Beijing’s efforts to internationalize the yuan. Hong Kong ( HSI ) rose 0.24% to 24,916 during Tuesday’s morning session, snapping two-day strength as investors took profits after the Hang Seng hit a 3-1/2-year high in the prior session. Locally, Hong Kong’s annual inflation rate hit to a three-month low of 1.4% in June, despite reduced electricity subsidies. Core inflation remained steady at 1.0% India ( SENSEX ) fell 0.01% to 82,377, while the Nifty 50 climbed 0.1% in morning trade on Tuesday, gaining for the second straight session. India may allow sugar exports in the upcoming 2025–26 season starting in October, amid early signs of a bumper cane harvest, Bloomberg News reported, citing a source familiar with the matter. Australia ( AS51 ) rose 0.03% to 8,695 on Tuesday, rebounding from a significant loss in the previous session. The Australian dollar steadied around $0.652 on Tuesday, following two consecutive sessions of gains, as investors digested the latest minutes from the RBA’s meeting. The Reserve Bank of Australia opted to hold its cash rate steady at 3.85% during its July meeting, defying market forecasts for a 25bps cut. Minutes released today from the RBA’s deliberations revealed that the board deemed such an aggressive move inconsistent with its stated cautious and gradual easing strategy. Investors now look ahead to a speech by Governor Michele Bullock for more insights into the RBA’s policy path, along with flash PMI readings later this week for further signals on economic momentum. In the U.S., on Monday, all three major indexes ended higher, the S&P 500 and Nasdaq 100 closed at fresh records, adding 0.1% and 0.5%, respectively, as optimism over strong corporate earnings outweighed ongoing trade tensions. U.S. stock futures held steady on Tuesday following a volatile session to start the week: Dow +0.07% ; S&P 500 flat; Nasdaq -0.10% . Currencies: ( JPY:USD ), ( CNY:USD ), ( AUD:USD ), ( INR:USD ), ( HKD:USD ), ( NZD:USD ). More on Asia: RBA holds rates steady, citing unclear inflation picture in July minutes PBOC keeps benchmark lending rates unchanged for 2nd month in July Japan’s core inflation eases to 3.3% in June, slowest pace since March Australia’s unemployment rate rise to over three-year high of 4.3% in June Japan’s June trade surplus plummets, exports contract again amid U.S. tariffs

Source: Seeking Alpha