Most Asian stocks kept to a slim range on Tuesday following mixed business activity readings from the region’s biggest economy, while Australian shares moved little after the Reserve Bank kept rates steady but flagged increased caution over sticky inflation.
Regional markets took some positive cues from Wall Street, which closed higher overnight on strength in technology stocks. But concerns over a looming U.S. shutdown limited any major gains.
U.S. President Donald Trump’s announcement of more trade tariffs– this time on lumber and wood products– also kept sentiment under pressure. S&P 500 Futures fell slightly in Asian trade.
Chinese shares muted as investors gauge mixed PMIs
China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes rose 0.2% and 0.4%, respectively, while Hong Kong’s Hang Seng index fell 0.2%.
Local trading volumes were muted ahead of the week-long National Day holiday, which is set to begin from Wednesday.
Government purchasing managers index data showed manufacturing activity shrinking for a six consecutive month, while services activity growth also slowed.
But private PMI readings painted a drastically different picture. RatingDog PMI data showed manufacturing activity expanding at its sharpest pace in six months, while service sector activity also clocked outsized growth.
Government and private PMIs differ in their scope of companies and regions covered, with investors usually using both prints to gain a broader picture of the Chinese economy.
But the sustained weakness in the government PMIs may elicit more stimulus measures and monetary easing from Beijing, with support from late-2024 stimulus seen petering out in recent months.
Australia shares flat as RBA decision looms
Australia’s ASX 200 index was flat as investors digested an interest rate decision from the Reserve Bank.
The RBA left rates unchanged at 3.60% as widely expected, citing caution over sticky inflation and a cooling labor market. All members of the RBA’s rate-setting board voted in favor of the hold.
The central bank flagged heightened caution over inflation, which it saw turning sticky in recent months and likely overshooting its forecasts for the September quarter.
The RBA also said it required more time to gauge the full effects of its rate cuts earlier this year. The central bank cut rates by a cumulative 75 basis points so far in 2025.
"Today’s statement casts some doubt as to whether the Bank will cut rates by 25bp at its next meeting in November, as we currently expect. Nevertheless, we still think there’s a strong case for the Bank to resume policy easing before long," Capital Economics analysts said in a note.
They added that despite some resilience in private spending, the Australian economy is "hardly firing on all cylinders," likely reinforcing the need for more monetary support from the RBA.
Broader Asian markets largely kept to a tight range on Tuesday. Japan’s Nikkei 225 rose 0.1%, while the TOPIX added 0.4% after both indexes marked a weak start to the week. Japanese markets were pressured by some resilience in the yen, which hurt export-heavy sectors.
Japanese industrial production and retail sales data largely missed expectations for August, sparking more concerns over a sluggish economy. But weakness in growth could also delay any more interest rate hikes by the Bank of Japan.
India’s Nifty 50 index tread water in morning trade, with local markets also on edge before an interest rate decision by the Reserve Bank of India on Wednesday.
South Korea’s KOSPI was flat, while Singapore’s Straits Times index rose 0.2%. South Korean industrial production and retail sales data also largely underwhelmed for August.
Source :
https://www.investing.com/news/stock-market-news/asia-stocks-muted-after-mixed-chinese-pmis-australia-skittish-before-rba-4262198
