Asian equities displayed a mixed performance on Tuesday, with a surprisingly strong reading from China’s official purchasing managers indices providing support for sentiment across the region, even as market participants largely stayed on the sidelines ahead of a key string of U.S. labor-market reports.
In Asian trading, U.S. stock index futures were largely unchanged after a mixed close on Wall Street, reflecting investor caution before the closely watched U.S. jobs data due on Thursday. Traders also continued to monitor diplomatic developments, with renewed U.S.-Iran talks scheduled in Doha later on Tuesday after both sides agreed to resume negotiations following attacks over the weekend.
China’s official manufacturing PMI unexpectedly returned to expansion in June at 50.3. The non-manufacturing PMI rose to 50.2 and the composite gauge climbed to 50.6. Those readings signaled continued momentum in the Chinese economy, helped in part by resilient high-tech exports. Against that backdrop, the Shanghai Shenzhen CSI 300 advanced just over 1%, while the Shanghai Composite was little changed.
Chip shares driving a standout quarter for regional equities
Tuesday was the final trading day of the second quarter, and regional markets looked set to close out one of their strongest quarterly performances in years. A robust, artificial intelligence-led surge in semiconductor names powered much of the advance across major markets.
Japan’s Nikkei 225 rose by more than 1% on the day and was on pace for a quarterly gain exceeding 36%. South Korea’s KOSPI slipped after recent record highs but remained set to post an almost 65% increase for the quarter, having more than doubled on a year-to-date basis.
Across the broader MSCI Asia ex Japan Net USD gauge, the index climbed roughly 21% over the past three months, led by strong gains in South Korean equities. Samsung Electronics (005930) surged nearly 98% in the quarter, while SK Hynix (000660) rallied about 225% amid strong demand for AI memory chips. Despite these outsized returns, overseas investors continued to be net sellers in several Asia markets.
Not all regional benchmarks participated equally. Hong Kong’s Hang Seng underperformed peers, posting a quarterly decline of about 7.5%, while China’s Shanghai Shenzhen CSI 300 advanced roughly 10% for the quarter.
Domestic data and policy caution weigh on select markets
Australia’s S&P/ASX 200 was little changed after minutes from the Reserve Bank of Australia’s June meeting reiterated a cautious posture on inflation and emphasized that policymakers will continue to assess incoming data before making policy adjustments.
Indonesia’s Jakarta composite fell about 2.7% and extended its underperformance as foreign investors pulled money out of the market, amid lingering worries over policy credibility, transparency and a potential MSCI downgrade. That weakness left the Jakarta benchmark as the world’s worst-performing major equity index this year.
Japan’s data flow showed industrial production rose by less than expected in May, while unemployment remained steady, consistent with a gradual normalization in economic activity. The Philippines’ recent trade and inflation prints were digested by investors, with oil price swings highlighted as a notable variable for the import-dependent economy. Thailand’s industrial production continued to point to softness in manufacturing, and Thailand’s SET index was little changed while the Philippines’ PSEi Composite slipped 0.9%.
What markets will watch next
Looking ahead, attention will shift to European inflation data, U.S. consumer confidence figures and Job Openings and Labor Turnover Survey (JOLTS) data ahead of Thursday’s U.S. nonfarm payrolls release. Market participants will also monitor remarks from Federal Reserve Chair Kevin Warsh on Wednesday, the progress of U.S.-Iran negotiations, and upcoming Indian data including the trade balance and a Reserve Bank of India credit review for further guidance as the third quarter begins.
For now, markets balance optimism drawn from China’s PMI and an AI-driven semiconductor rally against caution tied to upcoming U.S. labor-market releases and geopolitical negotiations.