Asia markets mostly fall, China slumps on weak data, Japan climbs after BOJ holds rates

Asia shares mostly in red on Thursday, China’s market led declines after the release of weak factory activity data, signaling economic headwinds. Conversely, Japanese stocks gained ground following the Bank of Japan’s expected decision to hold interest rates steady. Market participants, however, maintained a watchful stance due to the looming August 1st U.S. tariff deadline. Caution was also building ahead of key US economic data, such as jobs figures and PCE inflation. U.S. President Donald Trump announced Wednesday that the U.S. will impose a 15% tariff on imports from South Korea as part of a new trade deal that avoids steeper levies. Gold rose above $3,290 per ounce on Thursday, rebounding from a more than 1% drop to a four-week low in the previous session. Japan ( NKY:IND ) rose 1.06% to above 40,800 while the broader Topix Index gained 0.3% to 2,930 on Thursday. The Japanese yen rose past 149 per dollar on Thursday, recovering from the previous session’s losses after the Bank of Japan left interest rates unchanged in a unanimous decision, as widely expected. The Bank of Japan (BOJ) unanimously decided to keep its benchmark short-term interest rate at 0.5% in its July meeting. This move, widely anticipated by the market, maintains borrowing costs at their highest level since 2008 and reflects the central bank’s cautious stance on normalizing policy. Retail sales in Japan climbed by 2.0% year-on-year in June 2025, accelerating slightly from a downwardly revised 1.9% rise in the previous month and exceeding market expectations of 1.8% growth. Japan’s industrial production rose 1.7% month-over-month in June 2025, sharply beating market expectations of a 0.6% decline and bouncing back from a 0.1% fall in the previous month, flash data showed. Separate data showed, Japan’s housing starts fell 15.6% year-on-year in June 2025, slightly better than market expectations of a 15.8% drop and easing from May’s sharp 34.4% plunge—the steepest since September 2009. Japan’s consumer confidence index declined to 33.7 in July 2025, down from June’s four-month high of 34.5, and below market forecasts of 35.1. China ( SHCOMP ) fell 0.90% to below 3,600 while the Shenzhen Component lost 0.5% to 11,145 on Thursday, and the offshore yuan rose to around 7.19 per dollar on Thursday, snapping a five-session losing streak, even as investors weighed disappointing PMI data against cautious optimism from the latest Politburo meeting. Official data pointed to a loss of economic momentum in July, with the composite PMI dropping to a three-month low of 50.2 from June’s 50.7. Manufacturing activity remained in contraction, falling to 49.3 from 49.7, while the services PMI declined to 50.1 — its weakest reading in eight months — from 50.5. Hong Kong ( HSI ) fell 1.39% to 24,955 in early trade on Thursday, slipping for the third session following China’s weak PMI figures in July. The Hong Kong Monetary Authority kept its base rate unchanged at 4.75% on July 31, aligning with the U.S. Fed’s move to maintain its target range at 5.25%–5.5%. India ( SENSEX ) fell 0.71% to 80,954, halting gains from the previous two sessions, while the Nifty also fell 0.6% to around 24,700 after US President Donald Trump announced a 25% tariff on Indian imports. The Indian rupee held around 87.7 per dollar on Thursday, sliding toward an all-time low hit in February. However, Trump acknowledged that the US is still negotiating with India, while New Delhi appeared unfazed, holding firm on its trade stance. Australia ( AS51 ) fell 0.19% slipped 0.4% to below 8,720 on Thursday, ending its three-day winning streak, dragged down by miners and gold stocks. The Australian dollar strengthened to above $0.645 on Thursday, attempting to rebound from an over 1% loss in the prior session to end a five-session losing streak. Australia’s export prices fell by 4.5% quarter-on-quarter in Q2 2025, reversing a 2.1% rise in Q1 and marking the first decline in three quarters. Australia’s import prices fell by 0.8% quarter-on-quarter in Q2 2025, exceeding market expectations of a 0.5% decline and reversing from a 3.3% surge in Q1. Australian retail sales rose 1.2% year-on-year in June, surpassing forecasts of a 0.4% increase and marking the largest monthly gain since March 2022. While the data showed signs of a revival in household spending and supported the Reserve Bank of Australia’s cautious approach to monetary policy, it did not have much impact on expectations for a rate cut next month. In the U.S., on Wednesday, all three major indexes ended mostly lower after the Federal Reserve left interest rates unchanged at its July meeting, while investors digested a wave of earnings reports U.S. stock futures rose sharply on Thursday, lifted by strong earnings results from tech heavyweights Meta Platforms and Microsoft: Dow +0.30% ; S&P 500 +0.95% ; Nasdaq +1.36% . Currencies: ( JPY:USD ), ( CNY:USD ), ( AUD:USD ), ( INR:USD ), ( HKD:USD ), ( NZD:USD ). More on Asia: Bank of Japan holds rates steady at 0.5%, as expected Australia CPI slowest in four years in Q2, headline CPI at 0.7% Q/Q and 2.1% Y/Y Trump says U.S. strikes ‘massive’ trade deal with Japan, imposes 15% tariffs Japan vows more rice imports from U.S. as part of trade deal Japan’s core inflation eases to 3.3% in June, slowest pace since March

Source: Seeking Alpha