Asia report: Most markets rise amid mixed data from China, Japan

Asia-Pacific markets experienced an overall positive start to the second half of the year, with investors reacting to mixed economic indicators from China and revised GDP figures from Japan.

Patrick Munnelly, market analyst at TickMill Group, said the coming week would be filled with significant events, including elections in the UK, important data releases such as US payrolls, and speeches by key figures like Federal Reserve chair Jerome Powell and European Central Bank president Christine Lagarde.

“This is likely to lead to a volatile start to July,” he noted.

“France's legislative election may cause market volatility on Monday, especially if there is a shift to the left.

“In Europe, key data includes final June PMIs, flash HICP, May unemployment and retail sales, German CPI, and industrial production.

“The UK will hold an election on Thursday, with the Labour Party expected to win according to polls.”

Any reaction to a Labour government was expected to be minimal, Munnelly said.

“Japan's second-quarter Tankan survey is the only significant release in a quiet week for data.

“The Reserve Bank of Australia's June meeting minutes, as well as retail sales and trade data, are also due for release.”

Most markets start the second half in the green

In Japan, the Topix index reached a new 34-year high, rising by 0.52% to close at 2,824.28, while the Nikkei 225 saw a modest gain of 0.21%, finishing at 39,631.06.

The surge for the benchmark index was bolstered by significant gains in retail and shipping stocks, with J.Front Retailing soaring 14.72%, Takashimaya up by 11.06%, and Kawasaki Kisen Kaisha advancing 6.84%.

However, Japan revised its first-quarter GDP contraction by more than one percentage point year-on-year.

Chinese markets also reflected optimism despite ongoing concerns in the manufacturing sector.

The Shanghai Composite rose by 0.92% to 2,994.73, and the Shenzhen Component increased by 0.57% to 8,899.17.

Notable performers in Shanghai included Jilin Yatai Group, Kangxin New Materials, and China Grand Automotive Services, all of which posted gains exceeding 10%.

The uptick came even as China's official manufacturing PMI remained in contraction territory for the second consecutive month, though a private survey indicated the sharpest improvement in business conditions in three years.

South Korea's Kospi index climbed 0.23% to 2,804.31, supported by strong performances from Hyundai Glovis, up 9.82%, EcoPro Materials, rising 6.93%, and LG Energy Solution, which gained 6.28%.

In Australia, the S&P/ASX 200 fell by 0.22% to 7,750.70, weighed down by significant declines in companies like Guzman Y Gomez, which dropped 9.45%, Pro Medicus, down 5.31%, and Wisetech Global, which fell 5.18%.

New Zealand's S&P/NZX 50 posted a gain of 0.61%, closing at 11,789.39, driven by strong showings from Fletcher Building, Meridian Energy, and Sky Network Television, which rose 6.36%, 4.93%, and 3.83% respectively.

Markets in Hong Kong were closed for the Special Administrative Region Establishment Day holiday.

Currency markets showed minor movements, with the dollar last 0.06% stronger on the yen, trading at JPY 160.98, while the greenback weakened against the down under dollars, falling 0.25% on the former to AUD 1.4956, and retreating 0.18% from the latter to change hands at NZD 1.6386.

Oil prices saw modest increases, with Brent crude futures last up 0.49% on ICE at $85.42 per barrel, and the NYMEX quote for West Texas Intermediate rising 0.54% to $81.98.

China manufacturing data comes in mixed, Japan revises down GDP reading

In economic news, China's unofficial Caixin manufacturing purchasing managers' index (PMI) for June unexpectedly rose to 51.8, slightly up from May's 51.7 and surpassing market expectations of 51.2.

The improvement in the private survey contrasted with official data released over the weekend, which indicated ongoing struggles in the manufacturing sector.

According to the National Bureau of Statistics (NBS), China's official manufacturing PMI remained at 49.5 in June, unchanged from May, marking the second consecutive month in contraction territory.

The figure aligned with market forecasts and highlights persistent weaknesses across several sub-indexes, including new orders, raw material stocks, employment, and new export orders.

Meanwhile, the non-manufacturing PMI, which encompasses services and construction, fell to 50.5 from 51.1 in May, reaching its lowest point since December.

The services PMI dropped to a five-month low of 50.2, while the construction PMI decreased to 52.3, the weakest reading since July of the previous year.

In Japan, the government revised its first-quarter GDP figures, revealing a sharper contraction than initially reported.

The economy shrank at an annualised rate of 2.9% from January to March, down from the previously estimated 1.8% contraction.

That unexpected revision, attributed to corrections in construction orders data, cast a shadow over Japan's fragile recovery.

Revisions also affected earlier periods, with October-to-December growth adjusted to 0.1% from 0.4%, and July-to-September contraction deepened to 4.0% from 3.7%.

However, there was a glimmer of positive sentiment among large Japanese manufacturers, as revealed by the Bank of Japan's latest Tankan survey.

The main index for sentiment among large manufacturers rose to +13 in June, up from +11 in March and slightly above economists' expectations of +12.

That improvement, driven by a weak yen boosting exporters' overseas earnings, marked the highest level of business confidence since March 2022.

The index measures the percentage of companies reporting favourable business conditions against those reporting unfavourable conditions, indicating a cautiously optimistic outlook among Japan's manufacturing sector.

Reporting by Josh White for Sharecast.com.