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StreetAccount Summary - Asian Market Recap: Nikkei (0.56%), Hang Seng +0.62%, Shanghai Composite (0.09%) as of 04:10 ET

Jul 02 ,2025

• Synopsis:

  • Asia equities ended mixed Wednesday in a fairly directionless session. Japan's Nikkei and Topix closed lower for a third consecutive day. Mainland China stocks ended down but the Hang Seng held on to a gain. South Korea gave up some Q2 advances, India trading slightly lower alongside much of Southeast Asia. Australia ended higher, Singapore's STI at record high above 4K. US futures higher, Europe opened with modest gains. US dollar hovering at three-year lows, yen weaker. Treasury yields mixed, JGB yields mostly higher. Crude oil, precious metals and base metals all trading close to the flatline.

  • Asia stocks traded sideways in a quiet day for catalysts with only Japan's stocks seeing any move of note as investors responded to President Trump's threats to impose a maximum 35% tariff on Japanese imports. Market attention back on tariffs as the negotiation deadline looms with Trump insisting again that he'll stick to it with no further extensions. Precious few signs of a comprehensive deal being signed with any nation with only an interim deal with India possible.

  • In regional developments, Bank of Korea Governor Rhee said tariffs were a bigger risk to the country's economy than inflation, which in June crept higher to above 2.2% to match the year's high point. Australia retail sales growth was slightly below market expectations but this boosted hopes for an RBA rate cut. Thailand's political malaise continued with PM Shinawatra stripped of power and clinging to a majority in parliament, imperiling a critical budget passage just as forward economic indicators turn down.

  • Toyota Motor (7203.JP) said it will delay its EV plans and boost production of gas-fueled SUVs. Softbank's (9984.JP) deal to buy Ampere will face a more in-depth review by the FTC. Qantas (QAN.AU) admitted 6M customer accounts had been targeted in a 'significant' cyberattack.

• Digest:

  • Trump not considering tariff pause extension beyond 9-Jul, affirms trade deal with Japan unlikely by then:

    • According to Bloomberg, US President Trump told reporters on Air Force One that he is not considering delaying his 9-Jul deadline for higher tariffs to resume and renewed his threat to cut off talks and impose duty rates on several nations, including Japan. FT, citing multiple sources, reported US officials are seeking phased deals with the most engaged countries by 9-Jul with a narrow scope. Countries that agree would be spared the higher reciprocal tariffs but left with an existing 10% rate while talks on thornier issues continue. Trump added to criticisms about Japan's lack of US rice imports while repeating auto trade is also imbalanced. Mentioned tariff rates could be 30% or 35%. Article noted Trump proposed a 24% tariff rate for Japan and has been lowered to 10% during the pause. Trump expressed doubts that a Japan deal would come to fruition given their tough stance (especially on autos). In contrast, Trump sounded more optimistic about reaching a deal with India, acknowledging the possibility of an agreement over the next week. Nikkei cited a White House official saying Japan negotiations will be put on the backburner as other deals such as with India take priority.

  • Central banks concur tariffs the key risk factor:

    • Asia central bank rhetoric at the ECB Sintra forum confirmed that tariff effects remain the main x-factor for policy. BOJ Governor Ueda reiterated that he is going to wait for additional data to make a judgment on the next move, signaling that he's in no rush to raise rates (Bloomberg). Avoiding speaking directly about ongoing trade talks, comments imply Ueda remains in a wait-and-see mode on policy due to uncertainties related to Trump's trade policies. Added that he wants to see a convergence of headline and underlying inflation to 2% by the end of his term. Also said he probably won't be able to finish balance sheet normalization by then. BOK Governor Rhee indicated tariff impacts on economic growth pose greater risk than inflation (Bloomberg). Noted domestic inflation is well stabilized around 2% and BOK believes tariffs tend to be deflationary rather than inflationary. Amid the current easing cycle, observed recent elevation in financial stability risks, especially in terms of rapid rise in metropolitan house prices, which warrants monitoring of stability risks in deciding the pace and timing of further rate cuts. Fed Chair Powell repeated there would probably have been more rate cuts this year in the absence of Trump tariffs (Bloomberg). Powell also taking a wait-and-see stance, did not rule out a July cut and framed each meeting as live.

  • Shinawatra suspension may deliver severe blow to Thailand's already fragile economy, say economists:

    • Suspension of Thailand PM Shinawatra Tuesday by Constitutional Court plunged country into fresh political crisis with government on edge of collapse. Economists say also could deal blow to economy if Pheu Thai's razor thin parliamentary majority means proposed budget fails to pass as it grapples with falling tourist numbers, declining exports and faced with potential maximum US tariff penalty as negotiations lag (Bloomberg). Government forecasts FY25 growth of 1.3%, down from 2.3% earlier this year. Bank of Thailand said last week economy in May softened m/m as tourist numbers fell, manufacturing output contracted to offset surge in exports (Reuters). Tourism decline of particular concern: overseas visitors down 4.6% YTD already (Reuters). June's S&PGlobal PMI survey showed output improvement but forward-looking components such as business optimism, employment stalled; S&P economist said economy 'not in the clear yet' despite headline index showing expansive 51.1.

  • New BOJ board member Kazuyuki Masu warns against rushing into rate hikes:

    • Reuters cited newly inducted BOJ board member Kazuyuki Masu in his inaugural press conference Tuesday evening, suggesting BOJ should not rush into raising interest rates given various economic risks, reinforcing market views that US tariffs will keep BOJ in a holding pattern for the time being. Masu cautioned that while the initial gloom over the hit from US tariffs seems to be subsiding somewhat, policymakers should not be complacent about their impact on Japan's economy with trade talks with the US still in progress. Also agreed with the BOJ's view that underlying inflation remained short of its 2% target. Masu, a former CFO of Mitsubishi Corp, replaced former Hitachi executive Toyoaki Nakamura, who was seen as among the most dovish members in the MPC. Article noted Masu's appointment followed that in March of Junko Koeda, an academic known as a fiscal and monetary hawk who succeeded another dovish member that prompted external views that personnel shifts were being coordinated to substitute out strong reflationists. Masu described his own policy stance as "probably right in the middle" with no strong bias. Nikkei added Masu's thoughts on the appropriate pace of rate hikes, where he doesn't think they need to hurry on the basis that real rates are negative, albeit this should not be construed as advocating for a slower pace.

  • Notable Gainers:

    • +15.2% 267270.KS (HD Hyundai Construction Equipment Co.): To merge with HD Hyundai Infracore

  • Notable Decliners:

    • -1.7% 4519.JP (Chugai Pharmaceutical): NICE recommends Chugai Pharmaceutical's Nemluvio to treat moderate to severe atopic dermatitis in people 12 years and over

    • -0.6% 9984.JP (SoftBank Group): FTC opens in-depth investigation of SoftBank's purchase of Ampere - Bloomberg

    • -0.0% 2330.TT (TSMC): TSMC's Chiayi CoWos advanced packaging plant rumoured to resume full operation this week after one month suspension - Liberty Times Net

• Data:

  • Economic:

    • Australia May

      • Retail sales +0.2% m/m vs consensus +0.5% and revised 0.0% in April

      • Building approvals +3.2% m/m vs consensus +4.0% and revised (4.1%) in April

    South Korea June

    • CPI +2.2% y/y vs FactSet consensus +2.1% and +1.9% in prior month

      • CPI ex-food & energy +2.0% y/y vs +2.0% in prior month

• Markets:

  • Nikkei: (223.85) or (0.56%) to 39762.48

  • Hang Seng: 149.13 or +0.62% to 24221.41

  • Shanghai Composite: (2.95) or (0.09%) to 3454.79

  • Shenzhen Composite: (13.88) or (0.67%) to 2065.00

  • ASX200: 56.60 or +0.66% to 8597.70

  • KOSPI: (14.59) or (0.47%) to 3075.06

  • SENSEX: (367.22) or (0.44%) to 83330.07

• Currencies:

  • $-¥: +0.39 or +0.27% to 143.7960

  • $-KRW: +1.18 or +0.09% to 1357.5800

  • A$-$: (0.00) or (0.31%) to 0.6562

  • $-INR: +0.13 or +0.15% to 85.7315

  • $-CNY: +0.00 or +0.01% to 7.1662