Asian Markets Recover from Recent Sell-Off, but US Economic Data Keeps Traders Cautious

In today’s trading, Asian markets sought stability following a sharp sell-off earlier in the week. Meanwhile, a rally in the US Treasuries weakened the dollar and boosted the yen, as concerns over the US economy fueled expectations of significant rate cuts by the Federal Reserve. 

Investors are analyzing a busy week of data releases, including weak manufacturing figures and mixed labor data. 

Japan’s Nikkei 225 saw a drop of 1.1% closing at 36,657.09. Japan’s wage growth remained robust in July, with average cash earnings rising by 3.6% year-on-year, surpassing market expectations. Additionally, real earnings saw an unexpected increase of 0.4% during the same period, further strengthening the possibility of a potential rate hike in the near future. 

In South Korea, the Kospi closed 0.3% lower at 2,572.17, reflecting a 0.2% contraction in the country’s economy during the second quarter, aligning with expectations. 

Hong Kong’s Hang Seng index dropped by 0.27% in early trading, mirroring losses from the Nasdaq overnight, with tech stocks leading the decline. The Hang Seng Tech Index fell by 0.17%.

Among major tech movers, Baidu slipped by 1.18% while Alibaba and Tencent dipped by 0.37% and 0.13%, respectively. 

Mainland China’s markets saw slight recoveries, with the CSI 300 rising 0.16%, and the Shanghai Composite index saw a modest increase of less than 0.1%, reaching 2,785.80. Speculation about a potential fiscal stimulus from Beijing grew as mixed private sector PMIs underscored the need for economic support to achieve China’s 5% growth target. 

In Australia, the S&P/ASX 200 is up by 0.4%, closing at 7,982.40. Australia’s trade surplus unexpectedly grew from AUD 5.425 billion in June to AUD 6.009 billion in July. This was driven by a 0.7% increase in exports and a 0.8% drop in imports, signaling a mixed economic outlook.