Asia report: Markets mixed on positive data from China, Australia

3rd Sep 2025 09:20

(Sharecast News) - Asia-Pacific markets ended mixed on Wednesday as investors weighed rising global bond yields and fresh trade developments, while data out of China and Australia provided contrasting signals for the region's economies.

Patrick Munnelly, market strategy partner at TickMill, noted that "Japanese bonds experienced a decline in line with a global trend as a surge in corporate debt issuances and concerns regarding the budgets of developed nations weighed down European fixed-income assets and Treasuries.

"Rising yields affected the markets, leading to Asian stocks hitting their lowest point in three weeks."

Markets mixed as investors digest Australia, China data

In Japan, the Nikkei 225 fell 0.82% to 41,961.50, led lower by Tokyo Electric Power, down 6.99%, Mitsubishi Heavy Industries, off 5.34%, and SoftBank, which slipped 5.27%.

The broader Topix index declined 1.07% to 3,048.89.

Munnelly highlighted that "yields on 20-year Japanese government bonds rose to levels not observed since 1999, while 30-year yields reached their highest since being introduced.

"Longer-dated German bond futures dropped for the fifth consecutive session.

"US 30-year bond yields remained close to 5% following an increase on Tuesday that had repercussions on Wall Street."

Chinese equities also retreated despite RatingDog's China general services PMI hitting a 15-month high on stronger domestic demand and foreign orders.

The Shanghai Composite slid 1.16% to 3,813.56, with Harbin Xinguang Optic Electronics plunging 14.67%, while Inner Mongolia First Machinery Group and Zhejiang Tuna Environmental Science & Technology both dropped 10%.

The Shenzhen Component eased 0.65% to 12,472.00.

Hong Kong's Hang Seng Index fell 0.6% to 25,343.43 amid reports of a regulatory probe into alleged insider dealings involving staff at Hong Kong Exchanges & Clearing and the Securities and Futures Commission.

BYD Electronic International sank 4.99%, China Resources Beer Holdings lost 3.45%, and Midea Group shed 2.82%.

South Korea's Kospi 100 gained 0.53% to 3,225.22, supported by Korea Zinc, up 9.22%, LS Industrial Systems, which rose 6.75%, and SK Bioscience, adding 4.69%.

Australian shares declined despite second-quarter GDP rising 1.8% year on year, beating expectations of 1.6% and marking the fastest pace since September 2023.

The S&P/ASX 200 dropped 1.82% to 8,738.80, dragged lower by Xero, down 6.2%, Lend Lease Group, off 5.24%, and Block Inc, which slipped 4.88%.

Across the Tasman Sea, New Zealand's S&P/NZX 50 fell 0.44% to 13,074.81, with Westpac Banking Corporation losing 3.11%, A2 Milk down 2.77%, and Serko off 2.69%.

In currencies, the dollar was last up 0.19% on the yen to trade at JPY 148.64, while it slipped 0.11% against the Aussie to AUD 1.5320, and gained 0.08% on the Kiwi to change hands at NZD 1.7058.

Munnelly pointed out that "the yen weakened amid political uncertainties in Japan, coinciding with a rise in the dollar index for the second consecutive day."

Oil prices eased, with Brent crude futures last down 0.39% on ICE at $68.87 per barrel, and the NYMEX quote for West Texas Intermediate off 0.4% at $65.33.

China's service sector expands, Australian economy grows faster than expected

In economic news, China's services sector expanded at a faster-than-expected pace in August, driven by strong domestic demand and a rebound in export orders.

The RatingDog China general services purchasing managers' index (PMI) rose to 53.0 from 52.6 in July, beating expectations of 52.4.

Analysts at RatingDog said domestic demand was supported by Beijing's policy measures, while easing trade tensions with the US helped overseas orders recover.

However, they cautioned that persistent deflation in output prices and profits could undermine the sector's longer-term outlook.

"While this short-term boost is positive for business activity, the ongoing pressure on corporate profits could create negative feedback in the long term," said Yao Yu, RatingDog's founder.

The services reading followed an earlier PMI survey showing an improvement in manufacturing activity, contrasting with official data pointing to a sharper-than-expected manufacturing slowdown in August.

In Australia, the economy grew 1.8% year on year in the second quarter, the fastest pace since September 2023 and ahead of expectations for 1.6%.

The Australian Bureau of Statistics said growth was led by household and government consumption, with net trade also contributing as mining exports rose.

On a quarterly basis, GDP grew 0.6%, slightly above the 0.5% expected.

The Reserve Bank of Australia, which cut rates by 25 basis points to 3.6% in August, lowered its full-year growth forecast to 1.7% from 2.1%, citing a slower-than-expected pickup in public demand and weaker productivity growth.

Inflation eased to 2.1% in the second quarter, the lowest since March 2021, as consumer sentiment rose 5.7% in August to its highest level in more than three years, according to Westpac-Melbourne Institute data.

Meanwhile, Hong Kong regulators were probing allegations of insider dealing involving at least two staff members at Hong Kong Exchanges & Clearing and the Securities and Futures Commission, and brokers and social media influencers.

According to a report from Bloomberg, the individuals were suspected of tipping off traders about upcoming corporate announcements, including privatisations, over several years.

An SFC spokesperson said it was policy not to comment on ongoing probes, while the Hong Kong exchange also reportedly declined to comment.

Reporting by Josh White for Sharecast.com.