Asia stocks: Japan gains as BOJ holds rates steady; China slips on weak PMIs

Investing.com-- Most Asian stock markets fell on Thursday, led by losses in China after weak factory activity data, while Japan stocks climbed after the Bank of Japan held interest rates steady as expected.

Market participants remained wary of the approaching U.S. tariff deadline on August 1, when countries without trade deals would face higher duties. 

Wall Street indexes ended with marginal moves on Wednesday after the Federal Reserve held rates steady as expected, with officials indicating a rate cut in September was not likely.

However,  U.S. stock index futures rose sharply in Asian trading hours on Thursday as investors cheered robust quarterly earnings reports from Meta (NASDAQ:META) and Microsoft (NASDAQ:MSFT).

BOJ holds rates unchanged; Nikkei higher

The Bank of Japan kept interest rates steady in a unanimous decision on Thursday, but signaled future rate hikes if economic growth and inflation progress as projected.

The central bank also raised its outlook for both inflation and GDP growth in 2025.

Japan’s Nikkei 225 traded 0.8% higher before the announcement, and remained steady after the BOJ’s move.

The broader TOPIX index rose 0.7%.

China stocks lead losses after weak PMI data

Data on Thursday showed that China’s manufacturing sector shrank more than expected in July despite improving trade ties with the United States as weather-related disruptions weighed.

Local demand in China also remained weak, as recent stimulus measures from Beijing provided temporary relief. Non-manufacturing sectors also saw a slowdown in July.

China’s Shanghai Composite index dropped 1.1%, while the Shanghai Shenzhen CSI 300 declined 0.7%.

Hong Kong’s Hang Seng index fell 0.9% on Thursday.

Trade deals in focus as Friday deadline looms

Markets remained on edge ahead of the August 1 deadline when Washington may impose new tariffs if trade deals are not finalised. 

President Donald Trump said on Wednesday that the U.S. will impose a 15% tariff on imports from South Korea. He said South Korea agreed to invest $350 billion in the U.S. and purchase $100 billion of energy products.

South Korea’s KOSPI edged 0.4% lower on Thursday after gains in the previous session.

Additionally, Trump signed a proclamation imposing a 50% tariff on semi-finished and copper-intensive products starting Aug. 1, citing national security concerns

He also announced a 25% tariff plus penalties on India starting August 1, citing the country’s purchases of Russian military equipment and energy.

Futures for India’s Nifty 50 were largely muted on Thursday.

A Politico report stated that Trump will sign executive orders on Thursday imposing higher tariffs on countries that have failed to reach trade deals.

Singapore’s Straits Times Index fell 0.6%, while the Philippines’ PSEi Composite declined 0.7%.

Australia’s S&P/ASX 200 inched 0.2% lower. Data on Thursday showed that July’s retail sales jumped above expectations on higher discretionary spending.