Asian stock markets moved lower on Friday, with Japan and South Korea suffering the steepest falls after Washington's fresh tariff regime on imports from 60 trading partners came into effect. The new duties, which replace expiring temporary levies, arrived just as higher oil prices and mixed results from large U.S. technology companies put further pressure on sentiment.
U.S. equity futures were mixed as investors digested earnings and the broader risk backdrop. Nasdaq 100 futures were up about 0.3% and S&P 500 futures edged 0.1% higher, supported in part by Intel after its upbeat quarterly report. Still, gains were constrained following steep declines in Alphabet Class A and Tesla shares after their results, which revived concerns about rising AI-related spending.
Energy markets remained on edge. Brent crude stayed above $100 a barrel after Iran-backed Houthi attacks on Saudi oil tankers in the Red Sea raised the prospect of supply disruptions. Renewed U.S. strikes on Iran and public warnings about potential further military action heightened fears the conflict could broaden, reviving inflationary concerns as market participants weighed the risk of prolonged interruptions to key maritime energy routes.
Tariffs, oil and tech results compound pressure on exporters
Washington's updated tariff measures, which took effect on Friday, added a direct challenge to Asia's export-dependent economies. The new regime replaces previous temporary 10% levies and covers almost all U.S. imports, though certain items such as oil, gas and some foodstuffs are exempt. For economies reliant on trade and manufacturing, the effective tariff burden under the new rules is in the 10% to 12.5% range for markets including Japan, South Korea and Taiwan.
Market moves were notable: Japan's Nikkei 225 plunged about 3.2%, extending a three-week losing streak. South Korea's KOSPI tumbled roughly 5.8%, threatening to erase gains made earlier in the week. Hong Kong's Hang Seng and mainland China's CSI 300 each fell about 1.3%. Australia's S&P/ASX 200 lost roughly 1.0%, while Singapore's STI slipped about 0.5%.
Japan's equity retreat occurred despite data showing core inflation rose in June, as it remained below the Bank of Japan's 2% target. That dynamic kept expectations alive that policymakers will be cautious about additional rate hikes.
South Korea bore the brunt of the regional selloff. Heavyweight chipmakers underperformed as investors reacted to weakness in U.S. technology peers following this week's earnings reports. The KOSPI had earlier rallied on stronger-than-expected second-quarter GDP readings, meaning recent weakness risks wiping out those weekly gains.
Mainland China holds up for the week amid policy hopes
Although Chinese markets fell on Friday alongside regional peers, the CSI300 was positioned to end the week higher - on track to break a four-week losing streak with a rise of about 3.2% for the week. Investors have been positioning ahead of next week's Politburo meeting, where officials are expected to announce extra measures aimed at supporting growth after weaker second-quarter economic data.
DBS economist Samuel Tse said markets will be looking for stronger policy support for employment and household consumption at the Politburo meeting, along with further details on China’s long-term consumption strategy under the 15th Five-Year Plan. In recent weeks, state-backed buying has also helped underpin mainland equities and provide some cushion against the broader regional weakness.
Regional central bank attention, domestic data in focus
Australia's ASX 200 remained rangebound between roughly 8,500 and 9,000 despite firmer labour market reports earlier in the week, according to Tony Sycamore, a senior market analyst at IG. Market attention is turning to next week's second-quarter inflation data and comments from Reserve Bank of Australia Governor Michele Bullock for fresh guidance on the policy outlook.
The Monetary Authority of Singapore will open a busy week for regional central banks on Monday. Citi continues to hold a non-consensus view that the bank may steepen the SGD NEER policy band by 50 basis points, arguing that elevated energy costs and resilient core inflation present upside risks despite some softer readings of late.
Looking ahead, investors will be watching several regional data points: China’s July manufacturing PMI for signals on factory activity ahead of the Politburo meeting, Taiwan’s forthcoming report expected to show another quarter of export-led GDP growth, and South Korea’s July trade data, which will offer an early read on demand following June’s stronger-than-expected export performance.
Overall, Friday's session highlighted a convergence of policy and geopolitical risks that are directly relevant to trade-sensitive markets and commodity-linked sectors. Export-exposed equity markets, energy markets and technology sectors were among those most immediately affected as investors reassessed growth, inflation and earnings implications.